Document of The World Bank Report No. 13980-MAS STAFF APPRAISAL REPORT REPUBLIC OF MAURITIUS PORT DEVELOPMENT AND ENVIRONMENT PROTECTION PROJECT MAY 30, 1995 Infrastructure Division Central Africa and Indian Ocean Department Africa Region CURRENCY EQUIVALENTS Currency Unit Mauritius Rupee (Mau. Rs.) US$1 Mau. Rs. 17.8 (February 1995) Mau. Rs. 18.0 Average 1994 Mau. Rs. 17.6 Average 1993 WEIGHTS AND MEASURES Metric British/US Equivalent 1 meter (m) 3.28 feet 1 square meter (sq. m) 10.76 square feet 1 kilometer (km) 0.62 mile I metric ton (t) 2,204 pounds (Ibs) FISCAL YEAR July 1-June 30 ABBREVIATIONS AND ACRONYMS ACF Accelerated Cofinancing Facility from Japan ExIm Bank CAD Civil Aviation Department CEB Central Electric Board CHC Cargo Handling Corporation DS Directorate of Shipping EIB European Investment Bank ETFS Electronic Trade Facilitation System EU European Union GEF Global Environment Facility GOM Government of Mauritius ICB International Competitive Bidding JExIm Export-Import Bank of Japan LIBOR London Inter Bank Offered Rate MARPOL International Convention for Prevention of Ship Pollution MEPD Ministry of Economic Planning and Development MEQL Ministry of Environment and Quality of Life MFA Mauritius Freeport Authority MIEC Ministry of Internal and External Communication MMA Mauritius Marine Authority MOF Ministry of Finance MOW Ministry of Works MTS Ministry of Trade and Shipping NCB National Competitive Bidding NGO Non-Governmental Organization OPRC Oil Pollution Preparedness Response and Cooperation Convention SCL Single Currency Loan TEU Twenty foot Equivalent Unit (for containers) TABLE OF CONTENTS LOAN AND PROJECT SUMMARY ...........................................i I. THE ECONOMY AND THE TRANSPORT SECTOR ...................................I A. Introduction ........ , .,.,.,.1 B. The Macro-Economic Context and the Transport System .I C. Transport Sector Management Objectives and Issues 2 D. Previous Bank-Assisted Projects in the Environment and Transport Sectors and Lessons Leamed .3 E. Rationale for Bank's Involvement in the Sector .4 II. THE PORT AND FREEPORT SUB-SECTORS .......................................5 A. The Port 5 Capacity and Shipping Activities .5 MMA and CHC- Organization, Management, and Staffing Issues 6 Port Operations and Issues .7 Port Finances, Tariffs and Issues .8 B. The Freeport .9 Organization, Operations and Issues ......................... , . 9 Finances .................., . . . ... . 9 C. Port Environmental Issues .9 D. Port Development Plan and Participation of Stakeholders 10 m. THE PROJECT ................. 12 A. Objectives ................. 12 B. Project Description ................. 12 This proposed project was appraised in January 1995 by a World Bank mission consisting of Alain F. Ballereau, Task Manager and Principal Transport Economist, Aubert Zohore, Financial Analyst (AF3IN), Michel Audige, Port Operation Specialist (AFTES), Jan Post, Senior Ecologist (ENVLW), and Pierre Yourougou, Senior Financial Policy Analyst (FRSFP). Mr. Hans Peters (TWUTD) was the project's Lead Adviser. Manorama Gotur assisted with editing the reports (AF3DR). Br6nagh Murphy and Marie Therese Melkonian (AF3IN) also provided assistance in processing this report. Mr. Andrew Rogerson (AF3DR) and Ms. Maryvonne Plessis-Fraissard (AF3 IN) are the Department Director and the Managing Division Chief, respectively. C. Cost Estimates ......................................,. 13 D. Financing Plan .14 E. Implementation ..................................... 15 F. Procurement .17 G. Disbursement .18 H. Environmental and Social Impact .19 I. Supervision, Monitoring, Reporting and Auditing .20 IV. ECONOMIC EVALUATION .21 A. Forecast Traffic Demand .21 B. Operations Without and With the Project .22 C. Costs and Benefits Analysis .23 D. Overall Economic Evaluation, Sensitivity and Risks .23 E. Economic Assessment of MFA .24 V. FINANCIAL ANALYSIS .25 The Mauritius Marine Authority (MMA) .25 A. Past and Present Financial Performance .25 B. Future Financial Strategy and Projections .26 C. Financial Objectives and Covenants .28 D. Sensitivity Analysis .29 Mauritius Freeport Authority (MFA) .29 A. Recent Financial Results .29 B. Financial Projections .30 C. Sensitivity Analysis .30 VI. BENEFITS AND RISKS .31 VI. AGREEMENTS REACHED & RECOMMENDATION .32 ANNEXES. 1. Government Port Sector Reform Policy Statement .34 2. Summary of Environmental Impact Assessment .47 3. Supervision Plan and Outline of Semi-Annual Progress Reports 48 4. Project Monitoring Indicators .54 5. Tables and Charts .57 6. Project File .85 TABLES. 1. Port-Louis Historical Traffic per Category (Tons) FY87 - FY94 .......... ....... 57 2. Port-Louis Containerized Traffic (TEUs) FY87 - FY94 ............................... 58 3. Port-Louis Global Traffic Forecast .............................................. 59 4. Port-Louis Containerized Traffic Forecast .............................................. 60 5. Comparison of Handling Costs and Tariffs for Main Cargoes ............ .......... 61 6.1 Dry Cargo Tariffs Comparison .............................................. 62 6.2 MMA Tariffs Structure .............................................. 63 7.1 MMA Income Statements .............................................. 64 7.2 MMA Balance Sheets .............................................. 64 7.3 MMA Funds Flow Statements .............................................. 64 7.4 MMA Sensitivity Analysis ................................. , .,.,.,,,.65 7.5 MMA Assumptions for Financial Projections ................................ 66 8.1 MFA Statement of Income ................................ 67 8.2 MFA Cash Flow Statement ................................ 67 8.3 MFA Assumptions for Financial Projections ................................ 68 9.1 Detailed Project Cost Estimates ., 69 9.2 Project Costs by Categories ...................... . ................. 70 9.3 Estimated Project Expenditures by Years ........................................ 71 9.4 Estimated Cumulative Disbursement Schedule & Detailed Financing Plan.. 72 10. Operational Parameters Used for Economic Evaluation ............................... 73 11. Annual Port-days per Type of Cargo & Daily Average Ship Costs (1998 and 1999) .74 12. Annual Port-days per Type of Cargo & Daily Average Ship Costs (2000 and 2005) ........................................... 75 13. Economic Rate of Retum Calculation ........................................... 76 14. Economic Rate of Return Calculation & Sensitivity Analysis ............. .......... 77 15. Risk Analysis ........................................... 78 CEIARTS. 1. MMA - Existing Organizational Structure .79 2. MIEA - Proposed Organizational Structure .79 3. Project Implementation Schedule .80 4. CHC - Existing Organizational Structure .84 MAPS. IBRD 26794: Port-Louis New Container and Oil Terminal .86 IBRD 26863: Port-Louis Harbor General Layout .87 Loan and Project Summay i LOAN AND PROJECT SUMMARY Borrowers: Republic of Mauritius and Mauritius Marine Authority (MMA). Guarantor: Republic of Mauritius for the loan to MMA. Beneficiaries: Mauritius Marine Authority (MMA), Mauritius Freeport Authority (MFA) and Directorate of Shipping (DS) of the Ministry of Trade and Shipping. Poverty Category: Not applicable. Amount and Terms: US$30.5 million, consisting of: (a) US$23.4 million Single Currency Loan (SCL) to MMA, for civil works and related supervision contracts, and specialized short-term technical assistance for institutional strengthening, at the Bank's LIBOR-based variable lending rate, repayable over 15 years, with a 5-year grace period; and (b) US$7.1 million Single Currency Loan to the Republic of Mauritius for (i) onlending to MFA for civil works, and (ii) a grant to MMA and the Directorate of Shipping to improve conditions for marine environment protection and control vessels' sea-worthiness, at the Bank's LIBOR-based variable lending rate, repayable over 15 years, with a 5-year grace period. Onlending and Grant Arrangement: US$6.6 million of the loan to the Republic of Mauritius would be onlent to MFA at the same terms as in (b) above. The remaining US$0.5 million of the loan to the Republic of Mauritius would be a grant to MMA (US$0.3 million) and the Directorate of Shipping (US$0.2 million). Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less any waiver. 1 MMA is eligible for a SCL under the Pilot Program of 1993. ii Mauritius: Port Development & Environment Protection Project Financing Plan: (in US$ million) IBRD 1.1 29.4 30.5 30.5 ACF (JExIm) 0.2 23.2 23.4 23.4 EIIB - 19.7 19.7 19.6 Luxembourg 0.2 0.8 1.0 1.0 MMA 13.5 0.8 14.2 14.2 MFA 1.3 1.3 1.3 Government 0.4 0.4 0.4 Private Sector 0.7 9.0 9.7 9.7 Total 17.3 82.9 100.2 100.0 Note: Figures may not add up to total due to roundings. Economic Rate of Return: 19 percent for the Port Development Component Project ID Number: MU-PA-1926 1. The Economy and the Transport Sector 1 I. THE ECONOMY AND THE TRANSPORT SECTOR A. Introduction 1.1 Mauritius is one of the third world's success stories. Over a period of just under a quarter-century, the country transformed itself from a sugar-dependent economy with a per- capita income of US$300 (1970) to a middle-income country with a per-capita income of about US$3,000 (1993), led by a vibrant export-based industrial sector. However, Mauritius now faces some constraints to further rapid growth as a result of structural changes in the domestic economy and trends in international markets. On the home front, low-priced labor has been fully absorbed into the economy, and enterprises face full employment-induced wage pressures, current environmental stresses reflect the rapid growth of the last two decades and require an appropriate regulatory framework, as well as investment, for improved pollution control. On the international front, Mauritius' sugar exports are facing increased uncertainty regarding continued access to EU markets at preferential prices, while stiffer competition is arising in the textile industry from new low-cost producers. In order to ensure continued rapid, sustainable and equitable growth, the country is now addressing these constraints through a new strategic agenda including diversification of production and exports, improvement of efficiency, and protection of the environment. B. The Macro-Economic Context and The Transport System 1.2 The Republic of Mauritius comprises: the main island of Mauritius (some 800 km east of Madagascar) which accounts for about 91% of the land area and 97% of the population; and other small scattered islands. The country is on the maritime route between Europe and Asia around the southern tip of Africa: this route has regained part of its past importance due to the limitations of the Suez Canal, which cannot accommodate mega petroleum tankers. However, the remoteness of Mauritius from its traditional trading partners in Europe and new ones in Asia poses a challenge to the country in its pursuit of global economic integration. 1.3 The country's political stability and entrepreneurial spirit have supported a strong export-led economic growth which enabled the per capita income increase. Diversification, from an agriculture mono-crop (sugar) to light industry, textiles and tourism was at the root of Mauritius' success. Since independence in 1968, social indicators have markedly improved: life expectancy increased from 64 years to 70, infant mortality declined from 60 per thousand to 20, and adult literacy improved from 70 to 85%. 1.4 Trade has been growing in line with consumption, fueled by rising personal incomes, and the diversification of exports. Although sugar remains Mauritius' main export, its production is leveling off at around 550,000 to 600,000 tons, with sugar occupying about 95% of arable land. The Government strategy for continued rapid growth relies on diversification of production and exports, including products of progressively higher value. Import growth is expected to be in line with GDP growth. Efficient maritime and air transport will be required to meet competition in export markets from other fast industrializing countries such as China or Vietnam. 2 Mauritius: Port Development & Environment Protection Project 1.5 The country is generally well-linked to the rest of the world. Transport infrastructure comprises Port-Louis, the only deep-water port on the island with presently over 3.4 million tons of freight p.a., and the International Airport of Plaisance whose passenger and freight traffic reached over 1 million persons and about 20,000 tons respectively, in 1994. The inland transport system comprises about 1800 km of well maintained roads, 90% of which are paved. 1.6 The port of Port-Louis plays a key role in the Mauritian economy as the main thoroughfare for over 95% of the country's imports and exports. However, the port's capacity is now inadequate for handling its growing container traffic, due to insufficient mechanization of operations. In addition, port services are not as efficient or competitive as required by the business community. Thus, the country has begun to place a high premnium on more efficient port operations through improved management of the entities providing port services as well as investment to remove critical capacity bottlenecks. C. Transport Sector Management, Objectives and Issues 1.7 The Ministry of Economic Planning and Development (MEPD) oversees transport infrastructure development and ensures adequate allocation of public resources to the sector. The Ministry of Works (MOW) is in charge of the development and maintenance of main highways, while the upkeep of local roads is under local authorities. The National Transport Authority (NTA), which is responsible for road transport operators, regulates the passenger transport industry through licensing and tariff-setting. The Mauritius Marine Authority (MMA), reporting to the Deputy Prime Minister who is also in charge of MEPD and of the Ministry of Internal and External Communications (MIEC), is responsible for port operation and maritime transport. Created in 1992, the Mauritius Freeport Authority (WA) has responsibility to develop regional trade through transit and transshipment of cargoes on a tax- free basis, at both the port and the airport, but has still to develop its role. The Civil Aviation Department (CAD) under the MIEC is in charge of air transport regulation. Air Mauritius, the national airline, satisfactorily meets the demand for international tourism, along with a few foreign carriers; it has public and private shareholders. 1.8 Rapid economic development has generated a strong demand for better transport infrastructure; economic operators often face shortage of capacity and traffic congestion. In order to compete effectively, standards need to be raised to levels comparable with those found in port, airport and telecommunication facilities offered by Singapore, for example. Development plans for transport infrastructure and systems are generated by many sources from the public and private sectors, in response to requests by enterprises. MEPD has thus a difficult role to play to reconcile and prioritize such demands. The Government's policy objectives include the following: (i) promoting the full utilization of existing transport infrastructure to meet peak demand when congestion occurs, by using alternative facilities, extending working hours or increasing productivity; (ii) encouraging public transportation: air, land, sea to be offered by private operators on a commercial basis and without subsidies; and expanding infrastructure 1. The Economy and the Transport Sector 3 and facilities to meet demand in a cost effective way (an example is the recent public offering of shares of Air Mauritius); (iii) adequately maintaining facilities and infrastructure to reduce costs to operators and to the administration or authorities in charge; and (iv) paying due attention to environmental costs such as air and water pollution, as well as noise, through proper setting of engines, noise barriers and recycling of waste, and, in addition, including in any project design, consideration of the need for preservation of the national heritage of biodiversity, buildings, and protection of parks. 1.9 To meet demands of the transport sector and help realize these objectives, Mauritius should: (i) improve access to and out of the Port-Louis urban area; (ii) improve the performance of the sector parastatals, including MMA and CHC; (iii) increase productivity and efficiency in port and airport operations. To that end, in the road subsector the Government plans to ease congestion through a mixture of traffic management measures and investment in possibly light rail and/or a ring road to bypass Port-Louis. For the airport, the Government envisages a project including the extension of the runway. For the port, the Government--with the proposed project--is seeking to reform port institutions, mechanize, and increase transparency and efficiency in operations and extend facilities, in particular with a new container terminal and ship-to-shore container cranes. D. Previous Bank-Assisted Projects in the Environment and Transport Sectors and Lessons Learned 1.10 In the past, the Bank has financed three projects in Mauritius' transport sector: a port extension and modernization project at Port-Louis in 1974, and two highway projects in 1983 and 1989. At a total cost of US$13.6 million, the Port Project -Loans 976-MAS (1974) and 1339T-MAS (1976) provided financing for the current facilities at Port-Louis, including the construction of three deep water berths. The project was successfully completed in March 1983. 1.11 The Highways Project--Ln. 2337-MAS (1983)--totaling US$15.2 million comprised strengthening and improvement of 75 km of main roads, and strengthening of MOW's functions. The project was completed, with its main objectives met, in June, 1989. The Second Highway project--Ln. 3132-MAS (1989)--totaling US$30 million supported: the strengthening and improvement of about 45 km of main roads; resurfacing of about 130 kln; equipment for routine maintenance operation; traffic management; vehicle safety and emission control; and consulting services and training. The project has been implemented satisfactorily and will be closed at the end of June 1995, one year beyond the original closing date All development objectives have been met and the overall rating for the project is 1 (one). 1.12 The Bank is financing an Environmental Monitoring and Development project (Loan 3277-MAS) which is seeking, inter alia, to develop a comprehensive framework of environmental policy and an evolving legislation to provide Mauritius with a sustainable program of continued development with adequate and appropriate environmental protection. 4 Mauritius: Port Development & Environment Protection Project The project also supports the establishment of a conservation program and management plan for a maritime resource and monitoring program. The Environment Protection Act (1991) places Mauritius at the forefront of Indian Ocean nations on matters of environmental protection. The project implementation, initially delayed by the large number of institutions affected, is satisfactory. The proposed project will build on the achievements in the field of environmental protection. 1.13 The above projects' implementation was satisfactory as stated in completion reports. Overall, Mauritius' implementation performance in its investment operations has traditionally matched the high quality of its economic management. This success stemmed mainly from: (i) good institutional capacity; (ii) strong ownership as a result of involving institutions at the outset; and (iii) strong follow-up, once decisions were made. However, the focus of new operations has become directed toward more complex institutional goals, often requiring for their achievement the cooperation of various interest groups. This sometimes led to slow preparation of projects and/or delayed start-up and slow disbursement. To enhance project ownership and commitment of all stakeholders, the proposed project was prepared in close cooperation with the GOM, MMA/CHC and MFA, and in consultation with relevant private sector and trade union representatives. The project would focus specifically on strengthening the capacity of MMA and MFA, increased transparency and efficiency in port operations through structural change and expanded private sector involvement. E. Rationale for the Bank's Involvement in the Sector 1.14 The focus of the Bank's Country Assistance Strategy, discussed by the Board on May 24, 1994, is to help Mauritius achieve and sustain a higher level of economic performance based on increased competitiveness and diversification of production and exports, including the development of skills-intensive and service-based activities. This requires, inter-alia, improving the efficiency and competitiveness of key infrastructure, such as the port in an environmentally sound manner. The proposed project would contribute to achieve this goal. The Bank is already supporting Mauritius' drive to reach a higher level of performance, with economic and sector work (Mauritius-Technology Strategy for Competitiveness, Report No. 12518-MAU, September 1994) and lending (Technical Assistance to Enhance Competitiveness Project, Ln. 37360-MU, approved in May 1994). A Services Sector Modernization Project is in preparation. To broaden these efforts, the Government has requested the Bank's assistance to support and guide the modernization and extension of the port, and achieve the appropriate blend of institutional reform, capacity extension and financial engineering. GOM, MMNIA and MFA prepared the proposed project with the Bank helping to guide the process. This has generated broad-based support for the project, including its institutional and managerial objectives, as well as its investment components. The proposed environment component of the project is significant for its demonstration value for other countries in the area of marine pollution and vessel safety control which is now being examined in other neighboring islands for future possible GEF regional financing. A biodiversity conservation program for the restoration of habitats of endemic species was analyzed for GEF financing as part of the proposed project and is being processed separately. 11. The Port and Freeport Sub-sectors 5 II. THE PORT AND FREEPORT SUB-SECTORS A. The Port Capacity and Shipping Activities 2.1 Port Facilities: The port of Port-Louis offers a maxunum draft of 12m and can operate vessels up to 225m in length. During Fiscal Year 1994 (FY94), 794 vessels berthed at Port-Louis (of which 312 were fully containerized, 114 were multipurpose container, and 195 were dry and liquid bulk carriers). The port's facilities include 10 berths, but only four have the capacity to accommodate large vessels requiring a 12m draft. Berth occupancy rates for January to April 1994 varied from 14% for the sugar berth to about 60% for containers and other cargo berths, and 100% for the fishing berths. 2.2 Traffic and Capacity: Port traffic has increased steadily by 5% since 1979/80. During FY94, traffic reached 3.4 million tons, two-thirds of which was bulk cargo (mainly oil, sugar, rice and cement); of the remaining third (non-bulk), 75% was containerized. The chart below shows the distribution of traffic per category for FY94, and the historical traffic trend is given in Annex 5, Tables 1 & 2. Mauritius Port Traffic FY94 * Bulk Cargo 65%* ON Containers 25% El Gen. Cargo 5% * Others 5% * rates based on tonnage. Source: MMA 2.3 Container traffic has almost doubled over the past seven years, and reached about 96,000 TEUs in FY94, as seen in the chart below. Berths I to 4, where containerized cargo is handled, have been operating at close to their maximum capacity since 1993. Although some scope exists for productivity improvements and longer working hours, the present and expected traffic volumes justify the construction of a new dedicated container terminal now. Total traffic is projected to increase by 5% p.a. on average, container traffic increase would be about 6% p.a., exceeding the current capacity of the facilities. Traffic volume projections are in Annex 5, Tables 3 and 4. 6 Mauritius: Port Development & Environment Protection Project TEUs ('000) MAURITIUS - CONTAINERIZED TRAFFIC 100 .................................................................................................................................................................................. 90 80 70 Total Export 60 - [ =~~~~~~~~~~~~~~~~~~~~ TotablGeneral 80 50 40 30 20 10 0 * E l 86187 87/88 88189 89/90 90/91 91/92 92/93 93/94 Sourc: MMA 2.4 Maritime Transport and the Fleet: At present, Mauritius is served by five liner conferences. In addition to shipping companies that are members of the conferences, about 18 other shipping lines serve Mauritius' international trade, some of which operate feeder vessels. The shipping policy emphasizes the promotion of international and regional trade, as a way to generate foreign exchange and indirectly create employment. Inter-island shipping is being served by a newly created, government-owned shipping line with a multipurpose ship, the "Mauritius Pride". Mauritius' regulation of international shipping is largely unrestrictive. Unlike countries that give priority to the national fleet, Mauritius has no flag or cargo sharing requirements. 2.5 The control of cargo through customs in the port takes between only two to four days and does not unreasonably delay the traffic flows. Customs processing of cargo is based on the commonly used Sydonia system, which is now being supplemented by the latest Electronic Trade Facilitation System (ETFS) to allow processing of ship manifests and customs declarations before the arrival of vessels, to further speed-up custom processing. MMA & CHC - Organization, Management, and Staffing Issues 2.6 Mauritius Marine Authority (MAMA): The port is owned by the State and managed by NMMA under the Ports Act of 1975. The primary role of MMA is the administration and development of the whole port area, and operation of the commercial harbor through CHC. NMA is governed by a Board of Directors representing the public and private sectors. The Director General of MMA is appointed by the Board, subject to endorsement by the Minister responsible for ports. The Director General is assisted by two Deputy Directors General, also designated by the Board. Presently, MMA is organized in six departments and a secretariat (Annex 5, Chart 1). MMA has a staff of 627 (January 1995) and is considered about 20% overstaffed. Further, due to MMA's low wages (50% on average) compared with the private sector, the rate of absenteeism is high (15 to 20%), and qualified staff are in short supply for key functions such as piloting, marketing, cost accounting and legal counsel. II. The Port and Freeport Sub-sectors 7 2.7 Cargo Handling Corporation (CHC) was created in 1983. Its shareholders are MMA (40%) and the Government of Mauritius State Investment Corporation (60%), and it provides cargo handling services at common user facilities (mostly for containers, other unitized cargo and break bulk general cargo). CHC is headed by a General Manager who is appointed by the Board. CHC is presently organized in five departments which need strengthening and reorganization to meet future requirements (See Annex 5, Chart 4). With a staff of 1,150 (January 1994) CHC is about 40% overstaffed in relation to standard practices of more efficient stevedoring companies. CHC was created to defuse tense relations between the port labor and private port operators for many years before 1983. The operating practices of CHC, since its creation, have resulted both in overstaffing and excessive wages due to the systems of tour de role and piece rates that allow dockers to work an average of only 15 days per month while earning more than private sector employees working a full month. As a result, CHC's charges to port users are driven by its excessive labor costs. 2.8 Issues relating to port organization and management to be addressed by the proposed project include: (i) the outdatedness of the Ports Act of 1975; (ii) the duplication of roles between MMvA and CHC in controlling the same cargo, adding to the financial costs borne by port users; (iii) the unclear definition of responsibilities between MMA and other entities operating in the ports (such as the Central Electric Board (CEB), oil companies, or MFA), causing lack of transparency and accountability in port operations; (iv) the need for a clearer demarcation of the respective jurisdictions of the newly created Government agencies for marine and coastal services; and (v) the lack of authority of MMA over the use of land within the port area. Port Operations and Issues 2.9 Port Operations and Maintenance: MMA provides satisfactory maritime services, including piloting, tug service, and towage, and maintains the draft in the channel and berthing areas. CHC provides handling services for general cargo traffic, mostly containerized or unitized. Except for stevedoring, most of the equipment is used free of charge by CHC while it is owned and maintained by MMA. Drivers for handling equipment are employed by MMA while working for CHC. Private terminal operators handle major bulk cargoes (petroleum products, cement, wheat and sugar) through specialized facilities; other bulk cargoes (coal, fertilizer and maize) are handled by CHC. 2.10 Operational Performance: The less than optimal operating performance is due to the absence of contractually agreed performance standards for handling operations, between MMA/CHC. Operations are limited to a single 12 hour-day shift (except for container vessels), in contrast to modern ports which work 24 hours with two or more shifts. The absence of mechanization with ship-to-shore gantry cranes to handle containers also leads to low productivity and costly operations. The handling of containers is slow, 5.5 TEUs per hour and per gang, with a high 42% idle time, compared to a productivity of about 10 TEUs per gang per hour in comparable ports. Though some progress has been made in recent years (3 TEUs, 65% idle time in 1990), the productivity at Port-Louis remains sub-standard, and improvements in both gang performance and working time are needed. These issues would be addressed under the project. 8 Mauritius: Port Development & Environment Protection Project 2.11 Private Sector Involvement: Private firms operate their own facilities for bulk traffic in the port (sugar, flour, liquid ammonia, gas and oil, coal and cement). Operational performance of such firms is sound, except when the stevedoring is performed by CHC. However, the relation between MMA and the private sector needs to be more explicitly defined. Also, private sector operators do not operate under formal concession agreements with MMA, and are therefore not compelled to observe norms for their operations, in particular with respect to environment, security and safety. The proposed project would help define and implement standards for concession contracts. Port Finances, Tariffs and Issues 2.12 Financial Objectives, Tariffs and Costs: MMA's basic financial objective is to become more commercial and efficient by fully recovering its costs, in order to service its debt and yield a reasonable return on assets. MMA has actively pursued this objective. In the past, MMA's large cash flows yielded substantial financial revenue from short-term investments, and its current financial situation is very liquid. Separate tariff schedules are applicable by MMA and CHC as is common practice in ports. MMA charges for the provision of port infrastructure at berth and marine services, while CHC's charges relate to cargo handling services (See Annex 5, Table 5). 2.13 MMA's tariffs have remained unchanged since 1983. Currently, total port charges (NMMA and CHC combined) are on average 50% below tariffs of ports in the sub-region (Dar Es Salaam, Mombasa) but compare unfavorably (40% higher) with more efficient ports (Singapore, Maputo) for dry cargo (See Annex 5, Table 6.1). The high labor cost of CHC impacts unfavorably on total port tariffs. Port charges are also affected by high operation and maintenance costs, estimated at about 20% higher than normal practices. Currently, MMA's tariffs for berth and marine services are about 35% below costs after the recent revaluation of its assets (June 1993). However, as no cost accounting system exists at MIMA, tariffs are not cost-based and cross-subsidies between services are difficult to assess. Initial estimates indicate that container and piloting dues are subsidizing other services by about 11 to 17% (see Annex 5, Table 6.2). The project would improve MMA's financial management by introducing: (i) a cost accounting system; (ii) appropriate revisions of tariff level and structure; and (iii) cost containment measures and appropriate cost recovery for investment in port land development. To lower cargo handling charges, a concession contract would be established between CHC and MMA, to include phased-in reduction of labor costs and improved gang performance. Such performance indicators are included in Annex 4. Indicators for equipment availability, staffing, and overall productivity (tons/employee/year) are also given in Annex 4. Henceforth, CHC would lease or buy cargo handling equipment now put at its disposal by MMA. 2.14 Accounting, Budget and Auditing: The budget of MMA is prepared annually and includes an operations budget and a capital budget based on a three year rolling investment program. MMA forecast revenue budget is prepared on the basis of actual traffic flow adjusted by an estimated increase or decrease in traffic. The recurrent expenditure budget is compiled by the Finance Department after consultation with other departments, but is not based on any cost accounting analysis; a cost accounting system will be established by June II. The Port and Freeport Sub-sectors 9 1996 under the project. MMvIA's financial statements are satisfactorily audited by private auditors. The reports of such auditors (1990-1994) are unqualified. B. The Freeport Organization, Operations and Issues 2.15 Mauritius Freeport Authority (MFA): The Freeport Act of 1992 provides for the establishment of freeport zones in Mauritius and for regulation of their operations. The objectives of MFA are to control and manage a commercial freeport in various zones as identified from time to time by ministerial regulation, license operators and provide infrastructure, storage and ancillary facilities to private operators in these zones. Authorized freeport activities are warehousing and storage, sorting, mixing, packing and repackaging, minor processing and simple assembly, with exemption from customs and sales taxes. With fewer than 10 employees, MFA is just starting its operations. Day-to-day management is the responsibility of the Director General supervised by a Board of Directors including public and private sector representatives. No development strategy is yet in place, while the staffing of financial and information systems management also awaits completion. Issues to be addressed include: (i) clarification of the relationship between MMA and MFA for the allocation of land for freeport activities to be conducted in the port area; (ii) definition of land leasing rates within port limits; and (iii) development of sea-air feeder services. Finances 2.16 To date, MFA has obtained most of its resources from the Government to help finance the development of its business, which started only two years ago. During this period, Government has provided about Mau. Rs. 18.6 million for start up costs and equity investment. NMFA seeks to be self sufficient through full recovery of its costs once it has developed its business base. This is expected to happen by the year 2000, and by June 30 of that year, GOM will consult with the Bank on the future development of freeport operations. GOM is committed to the development of MFA to support its strategy to transform Mauritius into a regional entrep6t trade center. The project would support this effort to afford MFA an appropriate management framework and needed facilities to launch its activities. MFA's financial statements are satisfactorily audited by private auditors. The reports of such auditors are unqualified. C. Port Environmental Issues 2.17 Marine Pollution: Mauritius' environment has been affected to some extent by the activities of the maritime sector, particularly in the Port-Louis harbor and surrounding coastal waters. Waste petroleum-oil from ships is dumped at sea regularly because of a lack of reception, storage and disposal facilities. There is also a risk of accidental oil spills from petroleum tankers as the Western Indian Ocean is a major crude oil transportation artery. An estimated 450 million tons of oil per year are transported from the Middle East around the Cape of Good Hope. The proposed project would help build capacity to cope with spills, and a wider regional initiative is also under consideration for GEF funding. 10 Mauritius: Port Development & Environment Protection Project 2.18 Vessel Safety Control: Developed countries are enforcing strict maritime regulations; developing countries, including Mauritius, could increasingly be served by sub-standard vessels. Records of world shipping show an increase in ship-sinking, resulting in marine pollution by hazardous chemicals. In 1993, of about 40,000 vessels that were inspected, more than 10% were detained for non-compliance. The Vessel Safety Control gives a state jurisdiction over foreign vessels for the purpose of enforcing internationally accepted standards and safety codes. Such control is required to ensure adequate environmental protection, covering discharges at sea, crew competence and crew/ship working conditions as they enter a port. The project would help the Directorate of Shipping develop vessel safety control. 2.19 Hazardous Oil and Gas Products: Oil and gas storage facilities are currently located in the port main access area, and across a main city artery. This location poses a threat of loss of the port's assets and nearby residential properties and lives in case of accidental fire or explosion. The project would correct this by supporting the construction of a new oil terminal in a safe location, the reclaimed area of Mer Rouge, for the relocation of the storage facilities. 2.20 GOM has developed a comprehensive framework of environmental policy and an enabling legislation that provides adequate and appropriate environment protection. GOM has also developed a strategic agenda for port development and protection of the marine environment in line with the Mauritius Environment Protection Act (1991), addressing protection of its coastal as well as the region's waters. On October 14, 1994, GOM deposited with the IMO the necessary legal instruments for accession to the International Convention for the Prevention of Ship Pollution (MARPOL), the International Commission on Civil Liability and Oil Pollution Damage, and the International Fund for Compensation for Oil Pollution Damage. Mauritius is henceforth required to install facilities to accept and treat wastes from ships that call at Port-Louis. GOM deposited the instrument of accession to the International Convention on Oil Pollution Preparedness Response and Cooperation (OPRC), too, which aims to prepare for and respond to oil pollution incidents at the national and regional levels through oil pollution emergency plans and national and regional preparedness and response systems. To comply with OPRC, Mauritius must have adequate institutions, manpower and equipment to enforce the existing National Oil Spill Contingency Plan, as well as limited equipment to deal with accidental oil spills. The project would assist MMA and the Directorate of Shipping in establishing such capacity. D. Port Development Plan and Participation of Stakeholders 2.21 As part of the effort to diversify the economy, improve performance and strengthen competitiveness, the Government approached the Bank for advice on bringing its port operations to the cutting edge of competition, and developing the island into an attractive base for maritime trade. Such a base could excel with port services quality, tariffs and incentives attractive for business and trade transit through Mauritius. Such an objective requires a 2 Sumnuary of EIA in line with this Act for civil works of the proposed project is in Annex 2. 11. The Port and Freeport Sub-sectors 11 revision of existing port sector policy, calling for a change from the state-run, limited gateway to the local economy, towards a more dynamnic, market-oriented maritime business center. 2.22 To this end, the Government commissioned four studies, funded through a Japanese grant, to prepare a project that would attain the twin goals of efficient services and competitive rates in the country's port, through reform of port institutions and a larger role for the private sector, including the promotion and protection of the environment: (i) Port Policy, Institutional Strengthening and Pricing Study; (ii) Updating and Revision of the Port Master Plan; (iii) Mauritius Freeport Development Strategy; and an Environmental Safeguards Analysis to recommend measures where necessary, for businesses currently operating in the port and future proposals made by the Master Plan Study. 2.23 The Government of Mauritius, MMA, CHC and MFA, with the Bank helping to guide the process, prepared the proposed project in order to maximize beneficiary participation. All the interested parties, including port users and labor unions, participated in the planning of the institutional studies, as well as in the review of conclusions prior to their adoption by the Government. This participation has generated broad-based support for the project's activities, including its institutional and managerial objectives. 12 Mauritius: Port Development & Environment Protection Project III. THE PROJECT A. Objectives 3.1 The overall objective of the project, in line with the Bank's Country Assistance Strategy, is to enhance Mauritius' transport and trade competitiveness in the maritime sector, in an environmentally sound manner. To this end, the project would help: (i) increase port productivity, efficiency and capacity to meet the demand of port users and operators at competitive rates through extension of facilities, mechanization and improved management of MMA, CHC and MFA; (ii) re-define the role of MMA as a landlord port authority working through a system of competitive concession contracts with performance indicators for port operations; (iii) support the development of M1FA to promote Mauritius as an attractive tax- free base for regional entrep6t trade; and (iv) accompany port development with sound environmental protection, including control of marine pollution, and port operations and vessels' safety enhancement. B. Project Description 3.2 The proposed project, with a total estimated cost of US$100.2 million equivalent, would include the following three parts: Part A. Port Development (MMA) for US$89.3 million. This would include: (i) institutional strengthening to make MMA a more commercially-oriented landlord port authority, with sole legal authority over port operations, standards and land use, fostering streamlined port handling operations through concession contracts with port operators, including CHC; CHC would henceforth buy or lease cargo handling equipment put at its disposal by MMA and would open its capital to private investors including an experienced container terminal operator; (ii) improvement in the management and operations of MIMA and CHC through the implementation of their corporate plans, including organizational restructuring to achieve inter alia, cost containment, and rational marketing and pricing; CHC would improve efficiency to meet specified indicators; (iii) construction of a new three berth container and oil terminal, and procurement of related equipment including two gantry cranes for container handling; fire-fighting and computer equipment; a passenger terminal building and an internal road network for new port areas; civil works and pipelines to relocate oil and gas storage; and (iv) supervision contracts (100 person/month) for civil works, and specialized short-term assistance to develop and implement actions needed to strengthen the institutional set-up, management and operations of MMA (30 person/month) and training (20 person/month). Part B. Freeport Development (MFA) for US$8.9 million. This would include: (i) a study on the modalities for liberalization of the national regime governing air transport licensing, to allow for chartering of cargo planes to permit sea-air links, to facilitate sea-air transshipment activities to take into account, reciprocity in international air traffic agreements; (ii) implementation of a targeted trade development strategy through the execution of MFA's III. The Project 13 corporate plan to strengthen its organization and operations as well as rationalize its marketing and pricing; (iii) site preparation of 15 hectares of land at Mer Rouge including the construction of roads and office and customs buildings; and (iv) supervision contracts (24 person-month) for civil works, and specialized short-term assistance to develop and implement actions needed to strengthen management, operations and training at MFA (25 person-month). Part C. Environment Protection for US$2. 0 million. This would include: (i) a study (50 person-month) to define the requirements and to design facilities for collection and disposal of land and ship-based oily waste, and to draft regulations required to enforce safety in port operations and control vessels' sea-worthiness; (ii) construction of facilities for collection and pre-treatment of oily waste, and (iii) supervision contracts (30 person-month) for civil works and equipment and training (30 person-month) to fight oil spills and control vessels' sea-worthiness. C. Cost Estimates 3.3 Cost estimates for civil works are based on detailed engineering and unit prices for similar, ongoing works in Mauritius. The estimated total cost of the proposed project is Mau. Rs. 1,804 million, or US$100.2 million equivalent, including physical and price contingencies. The foreign exchange cost amounts to Mau. Rs. 1,492 million, or US$82.9 million equivalent. The table below gives the breakdown of project costs. % % Total ((Mau. Rs. Million) (USS Million) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs A. Port Component Container Terminal 139.4 1,018.4 1,157.8 7.7 56.6 64.3 88 78 Roads & Services 27.2 45.9 73.1 1.5 2.5 4.1 63 5 Oil Storage Reloc. 8.4 32.1 40.5 0.5 1.8 2.2 79 3 Passenger Terminal 4.4 6.4 10.8 0.2 0.4 0.6 60 1 Institutional Strengthening 9.9 28.6 38.5 0.5 1.6 2.1 74 3 Subtotal Port Component 189.3 1,131.4 1,320.6 10.5 62 9 73.4 86 89 B. Freeport Component Mer Rouge (Port) 30.0 89.6 119.6 1.7 5.0 6.6 75 8 Technical Assistance 3.2 12.2 15.4 0.2 0.7 0.9 79 1 Subtotal Freeport Component 33.1 101 8 134.9 1.8 57 7.5 75 9 C. Environment Component Marine Environment 5.2 19.2 24.4 0.3 1.1 1.4 79 2 Vessels Safety 3.3 3.0 6.3 0.2 0.2 0.4 47 - Subtotal Environment Component 8.5 22 2 30.7 0.5 1 2 1.7 72 2 Total BASELINE COSTS 230.9 1,255.3 1,48683 12.8 69.7 82.6 84 100 Physical Contingencies 26.6 122.3 149.0 1.5 6.8 8.3 82 10 Price Contingencies 54.7 114.1 168.8 3.0 6.3 9.4 68 11 Total PROJECT COSTS 312.2 1,491.8 1,804.1 17.3 82.9 100.2 83 121 Interest During Construction - 109.6 109.6 - 6.1 6 1 100 7 Total Coststo be Financed 312.2 1,601.4 1,913.7 17.3 89.0 106.3 84 129 Note: Figures may not add up to totals due to rounding 14 Mauritius: Port Development & Environmrent Protection Project 3.4 Physical contingencies applied to base costs have been estimated between 10% and 15% for works, and 5% for equipment and services. Price contingencies for foreign costs have been estimated at an annual 2.2% flat rate of increase from 1995 to 2001, and for local costs at 7% in 1995, 6% in 1996, 4% in 1997 and beyond. D. Financing Plan 3.5 The Government of Mauritius has requested the Bank (IBRD) to finance US$30.5 million as follows: (i) a Single Currency Loan (SCL) of US$23.4 million for civil works, equipment, supervision contracts and specialized short term assistance for MMA (under the Pilot Program for SCL), to be funded jointly and in equal amount with the Accelerated Cofinancing Facility from the Export-Import Bank of Japan (JExIm); and (ii) a Single Currency Loan of US$7.1 million to the Republic of Mauritius for (a) onlending to MFA (US$6.6 million), on the same terms as the Bank loan, for civil works, supervision contracts and specialized short term assistance; and (b) a grant to MMA (US$0.3 million) and the Directorate of Shipping (US$0.2 million) of the Ministry of Trade and Shipping for the environment protection component. The eligibility of MMA for a Single Currency Loan (SCL) was confirmed during appraisal, as MMA is independently managed from Government, has revenues denominated in US dollars, and manages its own currency risk. Conditions for loan effectiveness would be: (i) for the loan to MMA, all conditions precedent to the initial disbursement of the JExIm Loan, and (ii) for the loan to GOM (a) execution of the subsidiary Loan Agreement for MFA, and (b) all conditions precedent to the initial disbursement of the MMA loan. 3.6 Other sources of financing are: (i) a grant from the Government of Luxembourg for US$1.0 million for technical assistance to MFA; (ii) a loan from the European Investment Bank (EEB) for US$19.7 million for the two container gantry cranes and heavy yard handling equipment, (iii) MMA and MFA, who would fund local costs of US$14.2 million and US$1.3 million, respectively, and (iv) the private sector for US$9.7 million for light yard handling equipment and pipelines to relocate oil and gas pipeline relocation, as well as facilities for pre- treatment of oily waste. The EIIB and private sector investments would be confirmed, or a suitable alternative plan would be presented to the Bank by the Borrowers, within one year of loan effectiveness. GOM and MMA would finance US$0.8 million for local costs of the environment component. Financing Plan: GOM MtM A M FA IBRD ACF EIB Prlv. S. LUX Total For. (ECI Amt Amm Amt. Amt. AmIt Amt. Amt, Amtn. Amt Exch. Taoae) A. Port Componsnt Container Terminal. Equipment -0.0 10.6 - 20.9 20.9 19.7 6.3 - 78.5 67.7 10.8 Roads & Services 2.0 1 5 15 - - - 5.0 3.0 2.0 OIl Storage R eloc 0.0 - - - - 2.7 - 2.7 2.1 0.6 PaIsonger Tatminal 0.0 0 7 - - - 0.7 0.4 0.3 Inslilutlonal Strengthening 0.0 0.4 - 1 0 1.0 . . 2 5 1 .8 0.7 Subtotal Port Cmp 0.0 13.0 23.4 23.4 19.7 9.0 - 89.3 74.9 1 4.4 B. Freeport Component M ar Rouge (Port) -0.0 1 13 6.6 - - - 7.9 5.8 2.1 Techic.l Assistance - - - - - 1.0 1 .0 0 0.2 aubtotat Fre.port Camp. - 1.3 6 - - - 8 89 6 5 2.3 C. Environm ant Com ponent Marine EnvIronment 0.2 0.4 - 0 3 - 0.7 1 .6 1 .2 0.4 Vassals Safety 0.3 - 0.2 . . - . 0.4 0.2 0.3 Subtotal Envlainant Comp 0.4 0.4 - 0.5 . . 0.7 . 2.0 1 .4 0.6 Totat Disburs ent 0 4 14.2 1 3 30.5 23.4 19.7 9.7 1 0 100.2 82.9 17.3 Note: Figures may not add up to total due to rounding III. The Project 15 3.7 The use of a Single Currency Loan (SCL), especially for MMA, and the contemplated private sector investment in the proposed project represent noteworthy innovations to standard Bank financing arrangements in Africa, to date. By allowing a better exchange rate risk management, the single-currency, US dollar-based loan offers significant value to MMA, which earns most of its revenue in US dollars; the SCL's long termn 15-year maturity better spreads the annual financing costs for MMA, compared to its short-term and higher-cost alternative option. The same terms or better were secured for the project's cofinancing arrangements (JExIm and EIB). The anticipated private sector equity financing of equipment would reduce reliance on debt financing. Such financing sources include Mauritius' emerging stock market, after revision of CHC's Memorandum of Association, thus furthering the capital market-strengthening objective, consistent with an ongoing IFC project (Ln. 3699). E. Implementation 3.8 The project would be carried out by MMA, MFA and the Directorate of Shipping. MEPD would coordinate progress on institutional measures. Final engineering of the works has been satisfactorily completed by consultants. Bids have been launched to minimize start up delay and contracts are expected to be awarded in July 1995. Supervision of construction would be carried out by local and foreign consultants. The project would be implemented in 6 years, completed by June 30, 2001, and closed by December 31, 2001. A project implementation schedule is presented in Annex 5, Chart 3. 3.9 Implementation of port sector reforms, which are key to attaining the project's overall objective of increased efficiency and competitiveness in port operations, would require actions on the part of both Government and the institutions concerned. Critical activities identified below are part of project conditions agreed during negotiation; key performance indicators to be monitored are in Annex 4. 3. 10 Institutional Framework Strengthening. The Government of Mauritius has satisfactorily finalized the following documents and measures to allow for transparency and efficiency and private sector involvement: (a) Statement of Port Sector Reform Policy (Annex 1), including timetables for (i) adoption by GOM of the Port Master Plan and delegation to MMA of the authority to enforce such a Master Plan; (ii) establishment of specific regulations for port environment and vessel safety control and delegation to MMA of the authority to enforce such regulations; (iii) revision of the Ports Act; (iv) adoption of corporate plans for MMA, CHC and MFA, including quantitative performance targets and the establishment of a cost accounting system for MMA and CHC; and (v) revision of CHC's Memorandum of Association. (b) Revision of the Ports Act of 1975 incorporating such reforms to make MMA the sole legal authority over port land use and setting of operations standards; (c) revision of CHC's Memorandum of Association to gain access to private capital and know-how. Such a revision would include provision for CHC to enter into a technical arrangement with an experienced container terminal operator; and 16 Mauritius: Port Development & Environment Protection Project (d) revision of the Port Master Plan with delegation given to MMA to enforce the Master Plan and port environment safety norms and regulations. 3.11 Management and Operational Improvement: Assurances were obtained during negotiations that: (a) MMA would implement its Corporate Plan including a three year rolling investment plan for the mid-1995 to mid-1998 with quantitative targets and dates to measure performance. MNMA would update the three year rolling plan for port investment, and submit it, each year by June 30, for the Bank's concurrence; (b) MMA would, based on recommendations of a Technical Committee: (i) enter into a concession contract with CHC by December 31, 1996, for use of the existing terminal, under terms and conditions (performance indicators) acceptable to the Bank and payment of a concession fee to MMA and (ii) lease or sell its handling equipment to CHC based on agreed and acceptable tariffs; (c) CHC would implement its Corporate Plan for the mid-1995 to mid-1998 including quantitative targets and dates to measure performance; and (d) MFA would implement its Corporate Plan for the mid-1995 to mid-1998 including quantitative targets and dates to measure performance. 3.12 Investment in Port Facilities: Assurances were obtained that: (a) The procurement for civil works and services under the proposed project would follow Bank procedures and guidelines specified in Section F below; (b) MMA would prepare before February 28, 1997, a draft concession contract acceptable to the Bank, to define the main terms for the operational arrangements for the new container terminal. A qualified operator, acceptable to the Bank, would be selected by December 31, 1997; (c) MFA would consult with the Bank before undertaking new investments in common user facilities and would not operate such facilities, which would be given under concession contract(s) to qualified operator(s). 3.13 Services for Capacity Building at MMA and MFA and Directorate of Shipping: Assurances were obtained that consultant services for capacity building would be procured in accordance with Bank guidelines specified in section F. below. 3.14 Environmental Protection: Assurances were obtained for: (a) delegation to MMA by December 31, 1995, of the authority to enforce port operation safety and environment norms; and Ill. The Project 17 (b) establishment by December 31, 1996, of specific regulations for port and vessel safety control. F. Procurement 3.15 Procurement of Civil Works and Equipment would be undertaken on the basis of International Competitive Bidding (ICB), with the exception of the Road & Services at Mer Rouge and the Freeport Component, which would be undertaken through National Competitive Bidding (NCB), in accordance with IBRD's Guidelines for Procurement under IBRD Loans and IDA Credits (January 1995). IBRD standard bidding documents would be used by MMA and MFA for all ICB procurement. The prequalification of contractors for the new container/oil terminal was carried out in accordance with Bank guidelines. Tendering is scheduled to be launched in May 1995. 3.16 The following table summarizes the proposed methods of procurement for the project's categories and the estimated amounts: Procurement Method /a Procurement Arrangements International National Private (US$ Million) Competitive Competitive Sector Bidding Biddinwi Other Financing's Total Civil Works 56.3 5.5 - 2.6 64.4 (24.4) (2.5) (26.9) Equipment & Spare Parts 19.4 - - 10.3 29.6 (1.5) (1.5) Consultant Services & Engineering - - 3.4 0.2 3.5 (I. 1) (0. 1) (1.2) Training - - 2.3 0.3 2.7 (0.9) (0.1) (1.0) Total 75.6 5.5 5.7 13.4 100.2 (25.8) (2.5) (2.0) (0.2) (30.5) /a: Figures in parenthesis are the respective amounts financed by IBRD; /b: Mer Rouge's Roads & Sces and Freeport sub-component Ic: Civil works for Oil Storage Relocation and Equipment 3.17 MMvA would implement the Port Development Component and the related procurement. This is the second port project, and MMA's staff has experience in project management. Consultants were retained by MMA to prepare designs and bidding documents and would supervise the terminal construction with a team satisfactory to the Bank. Procurement capabilities of other agencies under the project, i.e., MFA and the Directorate of Shipping, were found satisfactory. The main port contract would include provisions for price adjustment over its two-year duration, and MMA would receive technical assistance under the project to monitor and publish indices of construction inputs (labor, materials, and equipment usage) on a regular basis. As the last Country Procurement Assessment Report took place in 1988, the borrower's procurement regulations and procedures have recently been reviewed by Bank staff, and have been found acceptable. 18 Mauritius: Port Development & Environment Protection Project 3.18 During project implementation, award for Bank-financed works contracts above a threshold of US$300,000 would be subject to the Bank's prior review. This will cover about 95 percent of the total works contract value procured by ICB and NCB (100 percent, ICB; 50 percent, NCB). Civil works contracts under US$300,000 and in an aggregate amount not exceeding US$2.5 million of Bank financing would be awarded through NCB. All equipment contracts above US$250,000 each, namely fire-fighting, office technology and computerized yard management system equipment and spare parts, would be procured through ICB. Goods contracts or packages above US$250,000 would also be subject to prior review, covering 100 percent of the total value of Bank-financed goods. 3.19 Consultant services financed by IBRD will be contracted on the basis of the World Bank Consultant Guidelines (August 1981). The Guidelines require the Bank to review and comment on each step by which the Borrowers select consulting firms, including: (i) preparation of terms of reference and budget; (ii) choice of selection procedure; (iii) preparation of shortlist (if not single source) and Letter of Invitation; (iv) submission of winning proposal and evaluation report; (v) negotiated draft contract. 3.20 In accordance with IBRD Guidelines (January 1995), prior review thresholds have been established for the procurement of services, per contract, at US$100,000 equivalent for consulting firms, and US$50,000 equivalent for individuals. Below these thresholds, the Bank conducts post review (1 in 5) of documentation for selected consultant contracts, but still requires prior review of TORs, assignments of a critical nature (e.g. environment), single source selection, and amendments bringing the total above the thresholds. 3.21 Procurement reporting to the Bank will be as follows: (a) contract award by the Borrowers; (b) quarterly reports indicating: (i) updated cost estimates for individual contracts and the total project, including best estimates of allowances for physical and price contingency; (ii) updated timning of procurement actions, including advertising, bidding, contract award, and completion time for individual contracts; (iii) compliance with aggregate limits on specified methods of procurement G. Disbursement 3.22 A schedule of estimated disbursements which takes into account the disbursement profile for projects in Mauritius is given in Annex 5, Table 9.4. Disbursement from the loan would cover: (a) for civil works: 50% of foreign expenditures* for MMA; and 100% of foreign expenditures and 40% of local expenditures for GOM; (b) for equipment and spare parts: 50% of foreign expenditures* for MMA; * The other 50% of foreign expenditures will be disbursed from ACF, which will jointly finance all MMA procurement contracts funded by the IBRD. III. The Project 19 (c) for consultant services: 50% of foreign expenditures* and 20% of local expenditures for MMA; and 100% of foreign expenditures and 50% of local expenditures for GOM; and (d) for training: 50% of foreign expenditures* and 20% of local expenditure for MMA; and 100% of foreign expenditures and 50% of local expenditures for GOM. Estimated Disbursements (in US$ million): IBRD/FY 1996 1997 1998 1999 2000 2001 Annual 4 8 14 4.3 0.1 0.1 Cumulative 4 12 26 30.3 30.4 30.5 3.23 The minimum application amount for payments directly from the Loan Account or for issuance of Special Commitments will be US$300,000 equivalent for MMA and US$100,000 equivalent for MFA. Disbursements will be fully documented except that withdrawals will be made on the basis of SOEs for the items below: - Civil works contracts valued at less than US$300,000 equivalent; - Goods and equipment contracts valued at less than US$250,000 equivalent; - Consulting firm contracts valued at less than US$100,000 equivalent, and individual consultant contracts valued at less than US$50,000 equivalent; - Local Training. 3.24 If requested by the Borrowers, and to facilitate disbursements against eligible expenditures for small contracts of less than US$250,000 equivalent, two Special Accounts (SAs) will be established in the name of MMA and MFA. The SAs will be opened and maintained in a commercial bank, acceptable to the Bank, with an authorized allocation of US$0.5 million for MFA and US$2.0 million for MMA, corresponding to about four months of expenditures. Replenishment applications will be submitted at monthly intervals and will include reconciled bank statements as well as other appropriate supporting documents. H. Environmental and Social Impact 3.25 Environmental and Social Impacts. The project is classified as Environment Category B. It builds on the achievement of the environment project on matters of conservation monitoring and was prepared parallel to a biodiversity project to be presented shortly for GEF financing. A specific Environmental Impact Assessment (EIA) was carried out for the construction of the new container terminal, in accordance with the guidelines of the Mauritius Environment Protection Act (1991). It concluded that the facilities would pose no significant threat to the land and marine environment. The report has been approved by Mauritius and an EIA license has been granted to MMA. This report is now public and has been received by the Bank and forwarded to the Public Information Center (PIC). The civil works would be executed in accordance with the provisions of the Mauritius Environment Protection Act, and detailed design and contractual arrangements have been prepared to comply with such provisions and the recommendations of the EIA on noise and other 20 Mauritius: Port Development & Environment Protection Project potential works related disturbances. In addition, a study is being finalized to recommend further specific improvement measures where needed, in the environmental safeguards of businesses currently operating in the port. Further, the project will immediately address the issue of the unsafe location and current operations by private oil companies of hazardous goods--gasoline--by facilitating the relocation of such goods. Finally, the environment component of the project would bring the port of Port-Louis up-to-date with environmental standards for ports (defined by international conventions such as MARPOL and OPRC), including the establishment of the capacity for ship technical control for sea-worthiness and safe disposal of oily waste to minimize pollution of coastal and international waters. MMA would be granted the authority, and its staff trained, to enforce port safety regulations on existing and future port operations. Hence, the project would contribute to enhancing the implementation of Mauritius Environment Protection Act. The project would also have a substantial and positive social impact by (i) providing more efficient and reliable conditions for Mauritius trade, and (ii) helping indirectly to generate new business in the international trading sector, thus securing and expanding employment. 1. Supervision, Monitoring, Reporting and Auditing 3.26 The Bank would devote some 84 staff weeks of supervision to the progress of the loans through FY2001. During the first three years, supervision will focus on progress towards achieving specific objectives such as works, implementation of corporate plans and performance of implementation agencies. In the final three years, the emphasis will shift towards evaluation of results and especially follow up to implement action plans. The scope and timing of supervision are shown in Annex 3. 3.27 Overall project monitoring would be based on indicators set up in Annex 4 and the implementation schedule shown in Annex 5, Chart 3. Monitoring would be carried out by MEPD through a steering committee chaired by MEPD's Director, assisted by consultants as necessary. Progress under each project investment component and action plan would be monitored by MMA, MFA, and MOA/iMEQL, who would report to the steering committee. Progress reports would be prepared every six months and be submitted to the Bank within one month thereafter. An outline of the progress reports is given in Annex 3. No later than three months after completion of the project, MEPD would prepare and furnish to the Bank a report on the execution of the project, its costs and the benefits derived and to be derived from it. 3.28 MMA and MFA would keep separate project accounts together with their statutory financial statements. Terms of reference for the annual audits of the project accounts were agreed at negotiations. Auditing will be carried out by independent auditors acceptable to the Bank, and the reports of such audits will be submitted to the Bank no later than six month after the end of the fiscal year. IV. Economnic Evaluation 21 IV. ECONOMIC EVALUATION A. Forecast Traffic Demand 4.1 Port-Louis harbor traffic grew by 5.6% p.a. over the period FY87-FY94, but containerized traffic grew more rapidly than other cargo, at a rate of 10% p.a. The traffic pattern of Mauritius is largely unbalanced between imports and exports. Of the total volume of 3.4 million tons handled in FY94, imports comprised over two-thirds, of which 75% were containerized. This imbalance generated a costly re-export of empties. Exports included more bulk than containerized cargo. FY94 In Out Total Laden 44,000 23,500 67,500 Empties 5,250 23,100 28,350 (TEUs) 49,250 46,600 95,850 4.2 Traffic Forecasts: Based on projected trends in population growth, levels of consumption and production for exports, the total port traffic is estimated to continue to grow at a rate of about 5% p.a. for the next 10 years, slightly slower than in previous years. Containerized traffic growth is expected to slow down from 6.5 % in FY95 to 4.5% in FY2000 (Annex 5, Table 4). Total Traffic: Actual & Forecast (in Tons): 1986/87-2014/15: MIaurfGus-Globa I TraWnc 8,000 o 000 7,000,000 _ 6,000.000 - ---BULK NPORT 4,000,000_. ^ 4 ,000,000 - -0- CONTA NER S 3,000,000 -w-- OTHER IMPORT/EXPORT 2.000,000 TOTAL 1.000,000 Flacal Ye a r 22 Mauritius: Port Development & Environment Protection Project Containerized Traffic: Actual & Forecast (in TEUs): 1986/87-2014/15: 2 500 .00 2 000 0 1a 0 ,eOO~ T I 1 D 0 0a 0 0 7 0 C3 e 93 0 3 1 F 1X c . I 6 * 1 r B. Operations Without and With the Project 4.3 Without the Project. The port of Port-Louis is constrained in its ability to unload and load container vessels because of (i) the insufficient number of dedicated berths for container vessels and (ii) the lack of container gantry cranes. As a result, container vessels have to wait their turn to be serviced, and have to use their own gears to handle containers, at an increasing cost. In addition, the stacking yard is adjacent to only two berths, and the handling of container vessels at the other two berths requires a lot of land haulage. The average quay occupancy rate (60%) is high, mainly due to the long time taken to handle general cargo vessels that are often old and poorly equipped. Also, the rate of handling container vessels is substandard (about 5.5 moves per hour per gang), though a few well- equipped self-geared vessels have managed up to 16 moves per hour. Although container vessels are given priority for docking, their average waiting time is likely to increase fast; the number of ship waiting days was 212 days in 1994 and is estimated to reach over 500 days by the year 2000, even with efficiency improvements to reduce dead time in gang operation. 4.4 The increase in bulk traffic (cement, coal, ammonia) would compete with the container traffic. Berth number I would no longer be available for containers and Berth number 2 would be used for bulk part of the time. Liquid bulk (petroleum and gas) will continue to use Berths 3 and 4 when the first two are not available. The growth of feeder vessels (if the transshipment policy promoted by WFA is successful) would further constrain the use of quays, and in larger proportion than the increase in volume handled, due to their lower efficiency. 4.5 With the Project. The proposed project will make available three additional berths, two exclusively for containers and one for petroleum tankers. The container terminal's productivity will increase substantially with the operation of the proposed two new container gantry cranes. Productivity is expected to reach over 25 moves per hour per crane; annual port-days are expected to increase from 876 to 1359; operating costs for various vessels range from US$6,650 to 12,670 (Annex 5, Tables 10, I1 and 12). Operation would start in early 1998 and all three berths are expected to be used at over 50% of capacity by the year 2005. From the first year of operation, it is expected that all container liners and feeder vessels will IV. Economic Evaluation 23 be handled at the new terminal. Geared container vessels will no longer be handled at the former terminal, and ships plying Indian Ocean routes are expected to become gradually gearless. C. Costs and Benefits Analysis 4.6 Costs and benefits of the container and oil termninal were evaluated at constant July 1994 prices. Financial cost estimates were converted to economic costs by excluding taxes, duties and price contingencies. Costs include construction and related maintenance costs for the 3 berths, stacking yard terminal, 2 container gantry cranes and 4 yard rubber tired gantry cranes and related tractors and trailers, and front end lift trucks. Benefits include cost savings attributable to reduction in: turn-around time for container and other vessels; handling costs for containers (mainly management improvement and lower labor costs); dead waiting time for cargo; and freight rates from the use of larger container vessels and petroleum tankers. Additional benefits would result from reduction of double handling between Berths I and 3 to reach the container stacking yard behind Berth 4 at a cost of about 1000 Mau. Rs. per container (US$50). 4.7 Savings in ship turn-around time and cargo time would benefit container traffic, as well as bulk and general cargo. Indeed, the transfer of container handling to the new terminal and of the petroleum and gas carriers to the new oil terminal would release space on Berths I to 4. On those berths, areas will become available to handle other cargo like fisheries' cold storage or rice in bulk. While MFA may later take advantage of these opportunities, such benefits have not been quantified. Overall, the benefits would accrue to cargo shippers and ship owners. With respect to container vessels, about 75% of benefits are estimated to be passed on to Mauritian cargo owners, given the strong competition among shipping companies. Most other cargo is carried on voyage charter ships chartered by Mauritians (State Trading Corporation and major private companies) and benefits would accrue to the Mauritian economy. D. Overall Economic Evaluation, Sensitivity and Risks 4.8 Economic evaluation only applies to the new container/oil terminal which represents 90% of the project costs and is based on a comparison of projected costs and benefits. The operational parameters used for the economic evaluation are given in Annex 5, Table 10. The streams of costs and benefits are set out in Annex 5, Table 13. The estimated economic rate of return (ERR) is 19%. The sensitivity of the return to variations in costs and benefits (Annex 5, Table 14) is summarized below: ERR (%) Base case 19 15% increase in costs (due to delays and/or price/quantities) 17 15% decrease in benefits (due to higher operating cost and lower demand) 17 Combined increase in costs and decrease in benefits by 15% each 16 4.9 A risk analysis was carried out to assess the probability of the worst case with a simultaneous occurrence of cost increases and benefit reductions of 15% each. The 24 Mauritius: Port Development & Environment Protection Project probability of getting the theoretical minimum rate of return of 15.6%, calculated in the sensitivity analysis (Annex 5, Table 14) is almost nil. The simulation based on a normal distribution law and 700 iterations, gives the spread of probability in obtaining an ERR from below 16.5% (less that 5 % of cases) to above 20.5 % (25 % of cases; see Annex 5, Table 15). 4.10 The results show that the project remains justified even with sizable variations in project costs and benefits. The assumptions used are conservative. In addition, the benefits of technical assistance have not been quantified; they include (i) a rationalized utilization of port land based on an approved Port Master Plan, avoiding misuse of premium land reclaimed from the sea; (ii) a more responsive service to private investors, operators and port users; (iii) trade opportunities for the country generated by transshipment; and (iv) less polluted port water, better handling of hazardous cargo and improved ship safety. 4.11 The main risks to the operation of the terminal would be in the event of exceptional tropical storms, in which case some damage may be caused to: (i) berths; (ii) berths and yard handling equipment; and (iii) containers. A special risk analysis has been carried out to evaluate the probability and amplitude of maximum waves in such storms. The results were used to calculate the design structure of the berths which is independent from the structure supporting the gantry cranes. Safety measures from other similar islands prone to tropical storms were used in the design (La R6union, and French West Indies ports). Warning mechanisms and emergency procedures are already operational and would be appropriate to mitigate this risk. Calculations of the economic return have taken into account elements of risks, including: (i) the uncertainty with respect to the development of transshipment operations likely to result from freeport activities; hence no traffic growth was ascribed to transshipment traffic beyond its actual volume of about 2500 TEUs; and (ii) the findings of a mathematical model analysis indicating that the new facilities would not be available for short periods (48 hours) three to five times per year, due to tropical storms. E. Economic Assessment of MFA 4.12 The economic justification of MFA's proposed investment was examined and indicated that the cost-benefit analysis of the proposed investment based on extemal benefits is satisfactory with a return of about 20%. The extemal benefits were quantified in monetary terms and include residual value of land, additional income for port and airport and direct employment revenues. Additional revenues are expected to accrue to Mauritian traders, but are not taken into account as too difficult to quantify accurately. Providing that MFA's development attracts sufficient free port operators to occupy its facilities, revenues from the project's investment would be able to cover all MFA's operational costs and gradually meet interest and debt repayment by the year 2000 to phase-out Government financing (see para. 5.19). Based on Mauritius' history of prudent management, and GOM's commitment to launch MFA, the project will support the initial phase of investment in site preparation to facilitate investment in facilities. During the project, GOM would consult with the Bank, by June 30, 2000, on the development of freeport operations. V. Financial Analysis 25 V. FINANCIAL ANALYSIS THE MAURITIUS MARINE AUTHORITY (MMA) A. Past and Present Financial Performance 5.1 The audited balance sheets, income statements and cash flow statements of MMtA are presented in Annex 5, Tables 7.1, 7.2 and 7.3. The data below highlights the good financial situation of MMA. Key Data FY1990 FY1991 FY1992 FY1993 FY1994 Operating Revenues (000. Mau. Rs.) 173,249 182,969 205,342 206,295 247,572 Operating Margin 51% 47% 52% 45% 48% Return on Net Assets 23% 39% 27% 22% 3% DebtlEquity 0.25 0.21 0.20 0.12 0.27 Traffic (000, Tons) 2,720 2,927 3,133 3,228 3,383 5.2 MMA's past financial performance is characterized by a careful management of its cash flow and leverage. Port operating revenues increased at an average annual rate of 9% between FY 1990 and FY 1994 when they reached Mau. Rs. 247 million due to growth in port traffic and the appreciation of the US dollar on which port tariffs are based. Port operating margin was kept at about 50% of revenues while the cost of borrowing was restricted to a maximum of 8% of revenues. This allowed MMA to accumulate cash reserves of about Mau. Rs. 340 million (US$17 million equivalent) by 1994, which compares favorably to most ports of the region. 5.3 MMA also maintained an appropriate depreciation policy to allow for periodic maintenance and replacement of its assets . The return on net assets was as high as 39% in 1991 and maintained at about 20% through 1993. The debt to equity ratio was maintained at a low level, 0.20. Finally, MMA employed qualified staff in its finance and administrative department. 5.4 On the downside, MMA has not consistently managed all potential revenue sources and associated costs. The cost of MMA's investment in cargo handling equipment (valued approximately at Mau. Rs. 105 million) for which MMA maintains a repair unit, was not recovered from Cargo Handling Corporation (CHC). Further, MMA has not been able to benefit from leasing the valuable port land over which it currently has no right. In addition, MMA's tariffs cannot be properly managed as their relationship to costs is unknown, due to the lack of a cost management system. Finally, beginning in 1993, MMA embarked on a plan to expand port facilities (under the proposed project) without adequately considering how to match long term investments with long term borrowing. This led to a rapid decrease of its cash reserve. 3 Revaluation of assets was done at the end of 1993 and will be carried out periodically as warranted by price increases. 26 Mauriftus: Port Development & Environment Protection Project 5.5 Under its initial plan of short/medium term borrowing, and without specific actions on tariffs and costs, MMA's cash reserve would have been depleted by 1997 and its internally generated funds4 would only cover one third its debt service requirements. MMA would have been unable to meet its obligations from 1997 onwards (Chart 1 below). Chart 1. MMA Internal Funds Vs Debt Service (Without the Project) Including Existing Debt: US$31 million; New Debt (from 1995) :US$25 million Medium Term Short term borrowing (LIBOR+ an estimated margin of 1.25%) '000 Mau. Rs. E& US$17 million Long Term concessional rate (estimated at 5%). 350,000 T 250,000 150,000 30,000 T m (50,000) 1990 1991 1992 1993 1994 1995 1996 1997 98 1999 2000 (150,000) Years (250,000) Not including a financing gap of US$10 million (350,000) I F | Estinmuad Intemal Funds available _ Total debt service (Offshore Barn) - Cash position Source: Mission estimates. 5.6 The overall earning capacity of the port is also affected by the inefficiencies and the high cost of the over-manned and mediocre performance of CHC (para. 2.7). This impacts negatively on the port's image, volume of traffic and revenues, especially for non-captive traffic. The distortions in the ports tariff structure are highlighted in Chapter II. B. Future Financial Strategy and Projections 5.7 Financial Strategy: The financial strategy envisaged with the project would build upon the strengths of MMA and support a program for improved cash flow management which would help MMA remain self sustaining and competitive. Such a strategy would address (i) management of borrowing cost (ii) enlarging the revenue base to include a cost recovery policy for all assets in use including land, to yield reasonable cash flow to sustain operations (See Chart 2 below). This program would also include (iii) costs and tariff management; and (iv) institutional support to the finance and administration unit to build its capacity for future financial planning and monitoring. This program would be implemented through a corporate plan to be approved by the Board of Directors of MMA, including specific financial objectives and covenants described in Section C hereafter. Similarly, a corporate plan would be implemented by CHC as an integral part of developing the port's business practices towards a 4 Internal funds available for debt service are 60% of the annual accumulated cash flow; the remaining 40% is allocated to urgent investments. V. Financial Analysis 27 more competitive and financially sound operation, and the performance indicators of this plan (see Annex 4) would be embodied in a concession agreement. 5.8 Financial Forecasts: The cash flow illustrated by Chart 2 below indicate that if the above components of the strategic plan are properly implemented, MMA's expected internally generated funds would exceed its debt needs, even leaving a surplus to fund potential investments. MMA's net cash position would at first significantly decrease from 1996 to Mau Rs. 50 million by 1999 due both to service of the existing debts and the investment required to extend port facilities (US$14 million to be contributed by MMA, representing about 20% of the cost). However, the cash position would remain positive and steadily climb to its highest projected level of Mau. Rs. 350 million by the year 2005. Chart 2. N4A-Internal Funds Vs Debt Service (With the Project) seoo 0 'O F 2 0 0 .000 la60 .0 0 10 0 .0 0 0a 0 0 0 .0 0 0 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 200 002 C==== _l - d I .& .d .a 1 1, In nl . . . _ T I Fh jT . | be D c. ,e|Il Source: Mission estimates 5.9 The return on net assets would be initially about 2% up to 2001, then increase as port traffic grows following modernization of its infrastructure, improvements in efficiency, and revision of tariffs (see data below). It would reach 5% by 2005. The debt to equity ratio would not exceed 1.5, which is satisfactory. The assumptions underlying these forecasts are presented in Annex 5, Table 7.5. Key Data FY94 FY95 FY96 FY97 FY98 FY99 FYOO FY01 Op. Rev. (000 Mau. Rs.) 247,572 259,951 299,648 314,630 396,434 416,255 437,068 474,597 OperatingMargin 48% 49% 51% 51% 58% 63% 69% 690/o Return on Net Assets . 3% 2% 2% 2% 2% 2% 2% 3% DebtEquity 0.27 0.25 0.80 1.44 1.43 1.43 1.50 1.51 Trffic (000, Tons) 3,383 3,599 3,791 3,996 4,193 4,391 4,588 4,772 28 Mauritius: Port Development & Environment Protection Project C. Financial Objectives and Covenants 5.10 The financial management program envisaged for MMA to remain self sustaining and competitive would include the elements described below to be made an integral part of a corporate plan for the approval of the Board of Directors of MMA. During negotiations, assurances were obtained to meet the following objectives and covenants: 5.11 Management of Borrowings and Currency Risk Exposure: Borrowing plans for investments in port facilities would be presented each year by June 30, in a three year rolling plan, acceptable to the Bank, and would match the nature of the assets and the sources of funds. The financing plan for the proposed investment would seek long term loans, with an appropriate grace period, to better match revenue generation and debt service. Currency risk exposure would be reduced by matching foreign currency denominated assets and liabilities. 5.12 Management of Tariffs: The current tariffs for port services are not related to the cost of the services. MMA's tariffs are estimated at about 35% below its cost after revaluation of assets; at the same time cross subsidies exist but cannot be properly ascertained (para. 2.13). A cost accounting system tracing the cost of the various services, including depreciation and the cost of capital and other common costs, and associated revenues, would be implemented under the project, before June 30, 1996, to provide a full basis for costs recovery and yield a reasonable cash flow to sustain operations. To this end: (a) tariffs for all services would be revised from time to time. Current estimates for revisions are, on average not less than 15% on June 30, 1996, to contribute to the cost of the planned extension works. Subsequently, based on the revenues and costs analysis of the services, tariffs would be adjusted no later than June 30, 1999, by not less than 8% on average. Tariffs would be revised regularly to: (i) maintain their real value; and (ii) generate a reasonable return on net assets in use (estimated at about Mau. Rs. 2.1 billion by the year 2000) of not less than 2% by the year 2000 to contribute to future investments; (b) MMA's working expenses would not exceed 40% of annual operating revenues by the year 2000 and thereafter; to this end, excessive maintenance and labor costs would be reduced by at least 20% in 1998, and 10% in 2000; and (c) annual long-term debt would not be higher than 1.5 times accumulated equity and reserves. Cargo handling charges would be lowered through a phased reduction in labor cost and improved gang performance to be specified in a concession contract between MMA and CHC. Such a contract to be acceptable to the Bank, would be executed by December 31, 1996, and would include performance indicators detailed in Annex 4. 5.13 Revenue Generation From All Assets in Use and Operating Cost Management: MMA would price appropriately all port related services with full knowledge of their costs structure, including land and rental values of properties. The cash flow generated annually as defined above would be invested in financial and other equity assets through the local financial markets, to at least prevent depletion from inflation. MIMA would be granted the authority to benefit from the investment in developing the land in the port areas. 5 Intermediate steps to be monitored through the corporate plan would be: 50% (1996) and 45% (1998), see Annex 4. V. Financial Analysis 29 D. Sensitivity Analysis 5.14 Given its good record in managing operating costs, the two elements to which MMA's financial performance would be particularly sensitive are revenue growth related to traffic volume and tariff revisions. The sensitivity analysis in Annex 5, Table 7.4, highlights the results of variations in revenues due to growth in the volume of traffic of 9%, 5% and 3%. The financial covenants would require revisions of tariffs. Further, efficiency gains in gang performance (See Annex 4, Performance Indicators) and reduction in costs (labor, maintenance) are expected to benefit port users and thereby mitigate the effect of tariff increases on ship owners. 5.15 Even the worst case scenario does not indicate a dramatic worsening of MMA's financial position. Such a situation could occur if traffic increases are below 3%. The reforms and efficiency measures included in the project would help mitigate this risk. In addition, the forecasts were prepared using a lower revenue growth, 5% rather than the historical trend of 9%, and operating expenses were conservatively forecast. THE MAURITIUS FREEPORT AUTHORITY (MFA) A. Recent Financial Results 5.17 The data below summarize the results of the first two years (1993-94) of operations of MFA. MFA's main source of revenue is rental of infrastructure (land, storage facilities, common areas, etc..) to private operators in freeport zones. This infrastructure is currently in a development stage, so MFA generated about Mau. Rs. 2.8 million over the two years for a total operating cost of about Mau. Rs. 12 million (Annex 5, Table 8.1). For these two years, the Government provided Mau. Rs. 14.6 million representing the bulk of the financing of the operations to support the development of MFA's business. 6 MFA - Income Statements (000, Mau. Rs.) ------ Audited -------I---------------------------- Projected -------------------------------------- FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 Revenues 8,816 12,632 13,378 9,778 25,920 25,920 25,920 25,920 25,920 Oper. Expenses 2,119 9,807 12,050 12,574 19,307 19,549 19,801 20,063 20,335 Depreciation 35 35 3,300 8,025 8,025 8,025 8,025 8,025 8,025 Interest 0 0 0 3,994 9,390 10,780 10,780 10,780 10,680 Surplus/Deficit 6,662 2,790 (1,972) (10,090) (18,791) (16,264) (6,840) (4,202) 2,812 Source: Mission/MFA estimates. 5.18 MFA is an autonomous entity and as such its ultimate financial objective is to be self- sustainable, recovering the full costs of its business and yielding a reasonable return on its investment. Because MFA is still to develop (see para. 2.16), GOM's support in covering operating costs (exclusive of depreciation and interest) will be required up to FY 2000, according to financial projections. Subsequently, MFA is expected to be self-sufficient. By 6 50,000 m2 of new facilities would be available from 1997. 30 Mauritius: Port Development & Environment Protection Project June 30, 2000, GOM will consult with the Bank as to the future development of freeport operations. B. Financial Projections 5.19 The assumptions, by MFA (Annex 5, Table 8.3), underlying the financial projections from 1995 to the year 2001 are detailed in Annex 5, Table 8.1 and 8.2. The financial projections in the table above indicate that MFA would meet its initial target of self sufficiency by the year 2000/2001 and become profitable thereafter with a return on investment of about 5% by 2005. C. Sensitivity Analysis 7 5.20 The projections for MFA would be most sensitive to the occupancy rate of the land . MFA revenues are mainly from rental of properties (warehouses, storage, etc.) and license fees. An increase in revenues depends on the number of freeport operators that MFA can attract. As the first two years of operations do not provide sufficient reference, the project is to assist the Government in launching this activity based on Mauritius' past good economic management record. Assurances were obtained during negotiations for MFA to limit investments to providing common user areas (site preparation) only, and leave the development and management of facilities (storage, buildings, etc.) to the private sector to avoid a heavy debt burden. Government would monitor the development of MFA and consult with the Bank; MFA has hired a qualified accountant and data processing expert to improve its financial management; and rental fees for warehouses would be increased from time to time to maintain commercial value, first before December 31, 1995, to a monthly rate of Mau. Rs. 7/feet2 in line with current market values. 7 A combined scenario of three rates (25%, 50% and 100%) is in Annex 5, Table 8. MFA intends to enter into a joint venture with private investors to build warehouses, replacing rental revenues by its share of potential earnings distribution. VI. Benefits and Risks 31 VI. BENEFITS AND RISKS A. Benefits 6.1 The economic rate of return for the new container and oil terminal (which represents 78% of total base costs) is estimated at 19%, but could vary from 17% to 16% under different, risk-related assumptions. By improving the competitiveness of the country's transport and trade, the project would support the development of international and regional entrep6t trade, both of which are crucial for continued rapid, sustainable growth of the Mauritian economy. Transport costs would be lowered through reduced ship and cargo waiting time. The port would benefit from better land use, in particular for prime areas reclaimed from the sea. The regulatory roles and organization of MMA and MFA would be strengthened to make both agencies more responsive to the needs of private investors and operators. MMA and MFA are expected to generate satisfactory cash flow and returns on investments under the project. The project would have a substantial and positive social impact by (i) providing more efficient and reliable conditions for Mauritian trade, and (ii) helping indirectly to generate new business in the international trading sector, thus expanding employment. The project would also help realize benefits in the form of reduced environmental risks, through less polluted port water, better handling of hazardous cargo, and improved ship safety control. B. Risks 6.2 The project is subject to three risks: (i) possible partial implementation of the proposed institutional changes, especially the labor redundancies at MMA and CHC; (ii) the effect of the annual cyclonic storms on the operations of the new terminal; and (iii) especially for MMA, the interest rate risk associated with a LIBOR-based SCL. The first risk has been minimized through the use of client consultation and beneficiary participation. All the interested parties--the Government, MMA, CHC, port users and labor unions--participated in the planning of the institutional studies, as well as in the review of conclusions prior to their adoption by GOM. The second risk has been mitigated by analyzing the possibilities of weather related loss and building the appropriate level of precaution into the design of the berth to enable it to withstand waves of even exceptional storms. In addition, provisions have been made to have gantry cranes secured to the ground, and yard equipment moved to safe shelters during such storms. Also, a reasonable number of days of operations have been deducted from benefits to take into account possible interruption of the port's operations on such occasions. For the third risk, MIMIA is eligible for a SCL under the Bank Single Currency Loan Pilot program. MMA's choice of a US dollar SCL will eliminate the foreign exchange risk that it would have faced with currency pool loans. While the LIBOR-based interest rate of the SCL is volatile and poses a risk, MIMA estimates that the benefits of reduced currency risk the SCL affords outweigh the interest rate risk. 32 Mauritius: Port Development & Environment Protecfion Project VII. AGREEMENTS REACHED AND RECOMMENDATION 7.1 During Negotiations. Agreements were reached on the following: With Government: (i) Government's Statement of Port Sector Reform Policy, including timetables for (a) adoption by GOM of the Port Master Plan and delegation to MMA of the authority to enforce such a Master Plan; (b) establishment of specific regulations for port environment and vessel safety control and delegation to MMA of the authority to enforce such regulations; (c) revision of the Ports Act; (d) adoption of corporate plans for MMA, CHC and MFA, including establishment of a cost accounting system for MMA and CHC; and (e) revision of CHC's Memorandum of Association (para. 3.10 (a, b, c, d) and para. 3.14 (a, b); and (ii) Consultation with the Bank by June 30, 2000, on future development of freeport operations (paras. 4.11 and 5.20). With MMA: (i) MMA would implement the project and conduct its business to meet agreed annual performance indicators (para. 3.11, (a)); (ii) execution by December 31, 1996, of a concession contract between MMA and CHC, and lease or sale of MMA handling equipment to CHC, under terms and conditions acceptable to the Bank (para. 3.11 (b)); (iii) MMA would maintain a Technical Committee with representatives of MMA and CHC to examine and recommend the steps required to reach agreement on the terms and conditions of the concession contract in (ii) above (para. 3.11 (b)); (iv) MMA would prepare by February 28, 1997, a draft concession contract, acceptable to the Bank, and select a qualified port operator, also acceptable to the Bank, by December 31, 1997, for the new container terminal (para. 3.12, (b)); (v) MMA would earn a positive return on net assets of not less than 2% by the year 2000. Tariffs would be revised from time to time to meet such a return (para. 5.12); (vi) MMA's working expenses would not exceed 40% of annual operating revenues by the year 2000 and thereafter (para. 5.12); and (vii) Annual long-term debt would not be higher than 1.5 times accumulated equity and reserves (para. 5.12). VII. Agreements Reached and Recommendation 33 With MFA (i) MFA would consult with the Bank before undertaking new investments in common user facilities and would enter into a concession contract with qualified operators of such facilities (para. 3.12, (c)); (ii) Rental fee for warehouses would be increased to Mau. Rs. 7/ft2 per month before December 31, 1995 and adjusted regularly (para. 5.20). General (i) The procurement for civil works and services under the proposed project would follow Bank procedures and guidelines (para 3.12, 3.13); and (ii) Auditing would be carried out by independent auditors acceptable to the Bank, and the reports of such audits would be submitted to the Bank no later than six months after the end of the fiscal year (para. 3.28). 7.2 Conditions for Loan Effectiveness: (i) for the loan to MMA, all conditions precedent to the initial disbursement of the JExIm Loan (para. 3.5), and (ii) for the loan to GOM (a) execution of the subsidiary Loan Agreement for MFA, and (b) all conditions precedent to the initial disbursement of the MMA loan (para. 3.5). Recommendation 7.3 Subject to the above agreements, the project is suitable for two loans totaling US$30.5 million, consisting of (i) US$23.4 million single currency loan (SCL) to MMA, and (ii) US$7.1 million single currency loan to the Republic of Mauritius, at the Bank's LIBOR-based variable lending rate. 34 Mauritius: Port Development & Environment Protection Prject Annex 1: Government Port Sector Reform Policy Statement DEPUTY PRIME MINISTER & MINISTER OF ECONOMIC PLANNING AND DEVELOPMENT MAURITIUS My Ref MEPDMEPU010\514\4\4 28Apnil,1995 : . ~~~~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~.. . -.... Mr Edward V.K.Jaycox,' Vice President, Africa Region, The World Bank, i818 H Street N.W.' Washington: D. C. 20433, USA. Dear Mr Jaycox, Port Sector Reform Policy Statement We have been, for some time now, considering the implementation of a port .expansion project and the reform of the: port sector to enhance productivity in ,: and improve the intemational competitiveness of, the port of Port Louis as part: of efforts to stimulate' intemational transport and trade and to promote economic diversirlcation. Discussions have been held with the Bank for a financing package to implement the'project and to reach a consensus on port sector reforms. The object of this letter is to Cdetailtout to'you the specific measures which we intend to take to bring about the necessary changes - institutional, legal and organisational - in the port sector and to seek your support in favour of the proposed port development project. Recent Economic Performance 2 As you are aware, Maunitius has enjoyed sustained growth for over a decade, with the economy expanding at an average annual rate of'5. 7 per cent in the period 1983-1993. Exports grew at a rate (16.9 per cent) faster than GOP to reach Rs 23,522 million in 1993, per capita income rose to neafly USS 3,000 from about US$ 1,000 ten years- earlier and unemployment dropped to less than 2 per cent of the labor force from the peak of 22 per cent in the early 1980's. There has been a radical change in the structure of the economy, with industry, in. particular the Export Processing Zone (EPZ), replacing sugar as the engine: of growth. Underpinning this success are trade preferences, which Mauntian sugar and industrial exports enjoy in the European and USA markets, and the availability of a large. pool of inexpersive but generally literate labor-which gave the country a comparative advantage in basically labor-intensive manufacturing products. Annex 1: Government Port Sector Reform Policy Statement 35 Constraints to Future Growth 3. Maintaining the growth momentum in the face of emerging challenges is a formidable task for Govemment. Key issues impinging on our efforts to further expand output and growth include labor and skill shortages (these are driving up wages and production costs, thereby eroding the comparative advantage of our export products), low labor productivity relative to what is obtained in countries. competing with us for export markets, and the gradual erosion of trade preferences as a result of the opening up of our traditional markets in the wake of the liberalization of international trade. These developments are threatening to undermine the ability of Mauritius to continue growing.on the strength of established activities and underline the need for Govemment to identify new sources of growth to further modernize the economy and to sustain continued increases in income and employment. Economic Diversification 4. Widening further the economic base through diversification of the production structure is the key aim of our development strategy. It lays.special emphasis on exploiting the development potenrial of the financial services, off-shore business activities and: intemational transport and trade activities, while consolidating the textile sub-sector of the EPZ by moving up-market. Central to this strategy is the development of Mauritius as a regional trade center to serve as a transit point for transshipment of goods between Europe and Asia/Pacific and African countries. Towards this end, a commercial freeport has been established to promote transshipment activities and re-exporft trade. The current economic development strategy, including freeport arc' regional hub initiatives, need to be supported by an adequate port policy designed to improve the performance and intemational competitiveness of the Pcrt of Port Louis and to meet the demands of port users in an optimal and timely manner Port Policy Issues 5. We commissioned in 1993, with the help of the Bank, studies to look at the various aspects of port. operation to serve as a basis for the preparation of a Port Expansion Project, including reform of the port-sec'or policy. The studies have identified severat issues - institutional, organizational, operational and financial - requiring our urgent attention. The key findings are as follows: a. Operational performance of the Mauritian Port is low relative to competing ports in the region. Overmanning, low labor productivity, shortages of qualified staff and significant time loss affect port productivity and intemational competitiveness; L. Overlapping responsibilities, in particular between MMA and other Govemment agencies, are leading to duplication. There is a pressing need to clarify relationships among, and hamnonize the roles and functions of, the various bodies operating in the Port; c. MMA and CHC organizational structures as well as that of MFA, manifest weaknesses. These are having an impact on their performance and efficiency; 36 Mauritius: Port Development & Environment Protection Project 4d. There are significant risks involved in the handling and storage of petroleum products and LPG along with other dangerous cargo,. while the location of oif tank farms in the middle of the Port constitutes a significant threat to life and property, including the marine environment; e. Prime land in the Port area risks being allocated in a manner not consistent with national priorities as there is no single body in the country withi responsibility to allocate and oversee the use of land; f. CHC is almost entirely dependent on MMA for shore-handling equipment. The Corporation is also undercapitalized. CHC should be given the means necessary for it to become a full-fledged operator; g. MMA tariffs have remained unchanged since 1983. These will have to be raised to enable MMA to improve its finances which are expected to come under severe pressure as a result of borrowings to finance the proposed container terminal project and other port development projects;.and h. Ship waste reception and treatment facilities are not available in the Port. As a result, vessels discharge oily wastes in the sea, affecting the marine environment and causing the pollution of intemational waters. We subscribe to the need to reform the port sector in order to address the critical issues impinging on port productivity and competitiveness. Details of the reform which we propose to implement are discussed below: Objectives of Port Policy i6..;. The port policy wiil be guided by the need to achieve the following major goals: a. Modemize the port infrastructure and mechanize port operations to the extent possible; b. Promote efficiency in the provision of port services; and C. Provide port services at competitive rates. The objective is to have a port which is modern, well equipped, efficiently operated, proressionally managed and provides services at competitive rates. Implementation of Port Policy 7 The policy with regard to the Port will be implemented through a supreme consolidated port authority which can create the right environment, where all the various parties concemed, including both public and private sector organizations, together with users, unions, and other interests can effectively play their respective roles towards.fhe provision of efficient and competitive port services. Govemment will ensure that they are alt given the chance to operate in an integrated manner under the drive of MMA which wouJd: regulate and control the various port activities and operations, while setting the price of porf services or approving such other tariffs as appropriate. The overall responsibili& willi therefore, rest with MMA as the national Port Authority vested with adequate powers to effectively control all port activities and operations, port development and land useL within the port boundaries. MMA will operate under the Ministry of Internal and Extemar Communications which will oversee that the port policy is being property implemented. Annex 1: Government Port Sector Reform Policy Statement 37 Key Aspects of Port Policy 8; T''-:Jhe'national port policy components shall include: '.:.'.... Statutory policy a. the legal and regulatory frarneworks of the Port Authority, port operators and port industry will be defined; b. the main port-sector functions between Govemment, the :Port Authority and port operators will be allocated bearing in mind the needs to safeguard national interes. and grant adequate autonomy. t the Por. Authority; *c. the Port Authorty will establish conditions for the llcensing of port operators. It will have powers to set tariffs for port services and salaries and conditions of service; d. the Port Authority will have direct control overland-use policy. Investment Policy The Port Authority will have powers to implement projects identified in the Port Master Plan. .i.- Financial and Tariff Policies ..The PortAuthority will be vested with powers to set financial objectives and regulate tariff at competitive levels. iv.:- Environment Policy This, in line with the Mauritius Environment Protection Act (1991), will aim at. responding to the need to have a sound port environment by:. a. delegation of authorfity to MMA, the Port Authority from. MEQL by December 1995 to enforce environment guidelines/regulations in the. port area; b. establishing regulations to control vessels safety-by December 1996; c. develooment of other necessary means to combat ship oily waste and oil spill pollution. v. Managerial MMA and CHC will both be fully commercialized to respond to commercial' exigencies. The'Rofe of Mauritius Marine Authority -'S.. M'' MA will be the supreme National Port and Maritime Authority regulating the port sector.,. Within the context of the port-sector reforms, Govemment will strengthen and: consolidate the present functions and powers of MMA, including the functions of a tandlord. port to ensure that the port sector is regulated, operated and controlled most professionally and competitively. 38 Mauritius: Port Development & Environment Protection Project 10. MMA will have all the functions, duties and responsibilities of a port authority. MMA will be the sole agency to implement the national port policy, the guardian of the Port Master Plan, once approved (expected before December 31, 1995), and Govemment's adviser on port matters. Its main functions will be that of the port developer, regulator, controller and coordinator. It will continue to be the provider of port infrastnucture and will maintain a: regulatory and controlling arm. In the short term, it will be the provider of -shore/yard equipment. It will continue to provide all marine services. 11. MMA revised objects, functions and powers will be embodied in a revised Ports Act,. the key principles of which have been adopted by Govemment (Attachment 1). It is intended that the draft will be presented to Parliament by July 1996. Similarly,, the corporate objectives, the strategy to accomplish these obiectives and the reorganization of MMA as spelt out in a Corporate Plan will be adopted by MMA's Board by end-1995; the plan will .cover the-next three years, (1996-98). .12. .. Government will give full support to MMA in implementing the main port -development and modemization projects identified in the revised Port Master Plan. ..The Role of Cargo Handling Corporation Ltd. (CHC) 1t3.: :0We support the pnnciple of CHC becoming a full-fledged port operator. The transition will be in phases, as indicated in CHC Corporate Plan to be adopted by CHCs' -Board by end-t 995 and will cover the following: a. CHC will be the sole port operator for containers, general cargo, and certain bulk cargoes on existing facilities under a concession agreement with MMA expected to be signed by December 31, 1996. b. CHC would acquire speciflic expertise in a technical arrangement with a known container terminal operator, expected by December 31, 1996. c. Should CHC qualify for the New Container Terminal, it will have total r-esponsibility for handling operations from start to finish, i.e. stevedoring to delivery and vice versa without MMA physical involvement. This will mean no presence of MMA in sheds, container parks, open storage areas, on quays, etc. d. MMA's role will be limited to regulatory, controlling and security functions (in so far as handling is concerned); it will, however, retain gate control, au-ction sales and cther legal responsibilities. e. Equipment: In the short and medium term, MMA will be the provider. A proper formula will be worked out through which CLHC will have full responsibility over the use/handling of its equipment which will be leased,. starting December 31, 1996 or earlier. To start operation of the new container terminal, CHC will acquire handling equipment as needed. f. Workshop: Similarly, MMA workshop services will continue to be used for repairs and maintenance of the equipment. However, MMA workshop will be reorganized to operate on commercial lines, and respond to operational exigencies promptly and effectively. Annex 1: Government Port Sector Reform Policy Statement 39 The Role of Mauritius Freeport Authority (MFA) 14. MFA will be the agency of Government for the marketing, management,. development and operation/regulation of free-trade zones, in particular those situated within the port and airport boundaries. It will have a complementary function to port authorities and operators, with which it will work in close collaboration. MFA would be instrumental in attracting regional trade and boosting transshipment traffic at Port Louis Harbor. 15. A study will be carried out starting in June 1996, on the prospect for liberalization of the regime goveming air cargo traffic in Mauritius to permit the chartering of cargo planes for sea/air and air/air transshipment of cargo. The Role of Private Sector 16. Present Position: The private sector is already substantially involved in the port sector, both in terms of ownership of installations and operations. Concrete examples are all the oil tank farms, fertilizer plant, flour mill and cement storage/packing facilities. The private sector is directly involved in about 65% of the total cargo, mainly bulk, handled in the port. 17. Capital Increase of CHC Ltd: CHC will operate the new Container Terminal on terms and conditions which will be specified in the concession contract to be signed with- MMA eventually. CHC will operate on the highest standards of efficiency, whether on manning, performance or handling charges. Should CHC fail to meet the performance, quality and safety standards expected by MMA as the regulatory institution within the given. time frame to qualify for the new container termina/, other altematives will be considered. CHC capital will be opened up to 20% to MMAICHCl employees and/or to the public ( Attachment 2). 18. Representation on MMA and CHC Boards: We will ensure that the pnivate sector, in particular the Chamber of Commerce and Industry and the shipping community, is represented on the Boards of Directors of MMA and CHC so that the private sector is actively involved in the development and operation o the Port. 19. Establishment of Port User's Council: A Port User's Council will be established to critically examine the adequacy, level and competitiveness of port facilities and services. The Council will have a consultative role on issues like port development, tariff revision, changes in documentation/procedures, etc. 20. Communication with Port Ernployees and Other Interests: We will encourage regular communication and consultation with port employees, trade unions, consumer associations, business community and the media to ensure that alt parties play their respective roles in a cohesive manner. Land Pricing 21 All land in the Port will be properfy priced. Rentals will, to the extent possible, reflect economic costs and current market values of land. Where short-term subsidization is required, the extent of the subsidy will be clearly shown to ensure transparency. 40 Mauritius: Port Development & Environment Protection Project Environmental Protection 22 As a first step towards the ratification of MARPOL and OPRC, we will strengthen the. capability of the Directorate of Shipping to enforce the Conventions.. Capacity for technicaf inspection of vessels will also be established. Draft regulations for vessels safety control will be prepared on the basis of a study to be carried out, before24 >31 >13 <20% STANDARD FC (TEUs) >22 >26 >8 <20% CONTAINER MULTI-PURPOSE >7 > 12 >6 < 15% A6 - Year 1999 MODERN FC (TEUs) >24 > 31 > 13 <20% STANDARD FC (TEUs) >22 >26 >8 <20% CONTAINER MULTI-PURPOSE >7 > 12 >6 < 15% A7 - Year 2000 MODERN FC (TEUs) >24 >31 > 13 <20% STANDARD FC (TEUs) >22 >26 >8 <20% CONTAINER MULTI-PURPOSE >7 > 12 >6 < 15% A8 - Year 2001 MODERN FC (TEUs) >24 >31 > 13 <20% STANDARD FC (TEUs) >2 >26 >8 <20% CONTAINER MULTI-PURPOSE >7 > 12 >6 < 15% FC: Full Container Vessel (a) Gross TEUs per hour per vessel in Port (b) Gross TEUs per hour per vessel at Berth (c) Gross TEUs per gang per hour (d) Percentage of gang idle time (%) * To be included in a concession agreement with CHC. 56 Mauritius: Port Development & Environment Protection Project IV. Equipment Availability (%) 1994 1996 1998 2000 Cargo handling equipment 45% 60% 70% 75% Mobile quay cranes 55% 60% 70% 80% Ship-to-shore Gantry cranes - - >95% >95% Productivity (*) 1 - (tons/employee/year) 680 850 1,100 1,350 2 - (TEUS/employee/year) 54 70 123 150 T*) Total traffic less bulk ('0007) 1,200 1,300 1,500 1,600 (*) Total traffic (TEUs) 96,000 110,000 170,000 180,000 V. New Container Terminal (e) (1) (g) B - NEW FACILITIES B1 - Year 1997 (Reference FULLY CONTAINERISED (TEUs) 14 18 7.0 CONTAINER XPURPOSE 12 15 7.0 B2 - Year 1998 FULLY CONTAINERISED (TEUs) 15 19 6.0 CONTAINER XPURPOSE 13 16 6.0 B3 - Year 1999 FULLY CONTAINERISED (TEUs) 16 20 5.0 CONTAINER XPURPOSE 14 17 5.0 B4 - Year 2000 FULLY CONTAINERISED (TEUs) 18 22 3.0 CONTAINER XPURPOSE 14 17 3.0 B5 - Year 2001 FULLY CONTAINERISED (TEUs) > 18 >22 <3.0 CONTAINER XPURPOSE > 15 > 17 <3.0 (e) Gross TEUs per hour per vessel in Port (per crane) (f) Gross TEUs per hour per vessel at Berth (per crane) (g) Average of containers dwell time (days) Annex 5: Tables and Charts 57 Annex 5 Table 1: Port-Louis Historical Traffic Per Category (Tons) FY87-94 ITEMS 86/87 87/88 88189 89/90 90/91 91/92 92/93 93/94 I BAGGED CARGO (A) IMPORT RICE 76,138 73,425 76,899 82,433 74,115 75,399 72,818 76,110 FLOUR 8,429 15,678 1,775 919 1,124 3,107 0 1,436 PULSES 3,028 2,147 1,488 815 921 617 709 504 ANIMAL FEED 8,868 7,678 11,147 2,491 5,563 1,633 5,742 1,239 FERTILIZER 9,179 1,560 1,519 1,777 100 III 165 200 SUB TOTAL (A) 105,642 100,488 92,828 88,435 81,823 80,867 79,434 79,489 (B) EXPORT BAGGEDSUGAR 0 0 0 0 0 0 1,000 0 FERTILIZER 6,775 4,381 1,264 2,830 4,360 1,922 905 700 OTHER 0 0 0 0 0 0 0 0 SUB TOTAL (B) 6,775 4,381 1,264 2,830 4,360 1,922 1,905 700 TOTAL (A)+(B) 112,417 104_869 94,092 91.265 86,183 82,789 81.339 80_189 II.BULK CARGO (C) IMPORT PETROLEUM PRODUCTS 370,711 414,124 457,625 519,681 495,256 567,882 585,232 584,184 CEMENT 271,570 323,998 366,466 419,504 479,381 513,920 565,524 581,949 WHEAT 0 0 21,065 69,184 90,270 76,307 88,689 110,848 FERTILIZER 60,027 43,290 51,239 59,741 51,036 47,957 52,191 47,796 COAL 28,998 70,341 49,739 51,172 87,190 70,636 35,037 62,904 MAIZE 18,979 23,121 30,806 29,711 24,761 39,599 33,411 47,967 L. P. GAS 5,887 11,546 15,512 22,915 23,504 26,930 31,189 31,128 EDIBLE OIL 18,002 21,157 20,642 19,235 22,025 25,373 24,523 19,598 BITUMEN 0 0 0 0 6,660 14,382 20,068 22,803 LIQUID AMONIA 13,987 17,809 11.849 19,350 15,300 19,290 17,989 10,221 SOY BEAN MEAL 1,322 2,767 5,802 6,760 8,010 10,627 10,864 13,890 TALLOW & C. SODA 5,132 6,395 4,536 6,748 3,821 5,975 3,583 6,152 SUB TOTAL (C) 794,615 934,548 1,035,281 1,224,001 1,307,214 1,418,878 1,468.300 1,539,440 (D) EXPORT FERTILIZER 0 0 0 0 0 3,396 2,089 3,693 SUGAR 656,726 562,362 601,332 456,366 513,122 490,422 497,225 443,900 MOLASSES 140,791 153,063 151.080 133,185 140,828 136,356 141,274 128,818 PETROLEUM PIPE-LINE 67,971 53,161 66,828 58,989 52,556 52,022 47,538 58,792 PRODUCTS BARGE 35,818 24.092 9,529 13,096 17,951 20,986 27,516 26,678 MAIZE 5,202 4,163 1.495 0 0 503 600 0 SUB TOTAL (D) 906,508 796,841 830,264 661,636 724,457 703,685 716,242 661,881 TOTAL (C)+(D' I ,701,123 I ,731.389 1.865,545 1,885,637 2,031.671 2,122.563 2,184,542 2.201.321 III.GENERAL CARGO (E) IMPORT 128,313 122,266 152,613 166,021 162,482 169,055 166,719 182,773 (F) EXPORT 2,357 6,436 8,228 7,571 11,520 1,170 839 853 (G) TRANS IN & OUT 491 411 614 3,249 748 3,348 859 1,543 TOTAL (E)+(F)+(G' 131_161 129,113 161,45' 176,841 174,750 173,573 168,417 X 185.169 IV.CONTAINERISED (H) IMPORT 213,806 293,219 317.932 321,255 379,709 418,135 444,340 524,132 (1) EXPORT 107,714 137,079 155,056 176,175 174,597 211,889 278,564 306,686 (3) TRANS IN. 2,310 2,583 14,288 9,492 12,680 47,049 13,361 25,251 TOTAL (H)+(1+(J 323,830 432_881 487,276 506_922 566.986 677.073 736.265 856_069 V.INTER-ISLAND GENERAL (K) IMPORT 3,088 2,885 4,130 5,504 7,638 5,519 998 841 CARGO (L)EXPORT 16,691 19,197 21,773 22,163 31,064 37,674 17,376 14,636 TOTAL (K)+(L) 19.779 22.082 25.903 27,667 38.702 43.193 1 154377 VI. FISH & DIVERS (M) LOCAL MARKET 8,596 12,321 13.573 12,861 14,014 16,821 21,394 21,478 (N) DIVERS 20,635 17,845 26,911 18,819 14,274 17,050 17,308 23,234 TOTAL(M)+(N1 29.231 30_166 40_484 2 233871 44,712 GRAND TOTAL 2,317,541 2,450,500 2,674,755 2,720,012 2,926,580 3,133,062 3,227,639 3,382,937 GENERAL TREND 5.7% 9.2°o 1.70 7.6% 7 1% 3.0% 4.8% Source: MMA 58 Mauritius: Port Development & Envirorunent Protection Project Table 2: Port-Louis Containerized Traffic (TEUS) FY87-FY94 _ C.Y 86/87 87/88 88/89 89190 90/91 91/92 92/93 93/94 Import FULL 23,099 25,221 28,722 29,277 33,381 36,561 40,498 44,000 EMPTY 2,468 2,986 2,048 3,475 2,869 5,351 5,335 5,250 Total Import F+E 25,567 28,207 30,770 32,752 36,250 41,912 45,833 49,246 Export FULL 11,898 12,551 13,550 14,688 15,373 19,092 21,403 23,500 EMPTY 11,813 14,918 15,495 14,832 18,653 19,250 21,099 23,100 Total Export F+E 23,711 27,469 29,045 29,520 34,026 38,342 42,502 46,582 Total General Imp+Exp 49,278 55,676 59,815 62,272 70,276 80,254 88,335 95,828 Trend 13.0% 7.4% 4.1% 12.90/% 14.2% 10.1% 8.5% Laden 34,997 37,772 42,272 43,965 48,754 55,653 61,901 67,500 Empties 14,281 17,904 17,543 18,307 21,522 24,601 26,434 28,350 Percentage Laden 7 1.0% 67.8% 70.7% 70.6% 69.4% 69.3% 70.1% 70.4% Source: MMA Annex 5: Tables and Charts 59 Table 3: Port-Louis Global Traffic Forecast (Tons) FY94-FY2015 ITEMS 93/94 94/95 95/96 96/97 97/98 98/99 99/2000 2004/05 2014/15 IBAGGED CARGO (A) IMPORT RICE 76,110 72,500 73,750 71,250 72,500 73,750 71,250 75,000 0 FLOUR 1,436 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 PULSES 504 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 ANIMAL FEED 1,239 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 FERTILIZER 200 500 500 500 500 500 500 500 500 SUB TOTAL (A) 79,489 77,500 78,750 76,250 77,500 78,750 76,250 80,000 5,000 (B)EXPORT 0 0 0 0 0 0 0 0 BAGGED SUGAR 0 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 FERTILIZER 700 750 1,000 1,500 2,000 2,000 2,000 2,000 2,000 OTHER 0 0 0 1,750 3,500 3,500 3,500 3,500 3,500 SUB TOTAL (B) 700 2,250 2,500 4,750 7,000 7,000 7,000 7,000 7,000 TOTAL(A)(B) 80189 79 5 81,25 0 8450 85750 83,250 8700 12,000 II.BULK CARGO (C) IMPORT PETROLEUM PRODUCTS 584,184 654,600 710,000 751,000 773,000 811,000 863,000 1,079,000 1,642,000 CEMENT 581,949 605,000 632,000 661,000 697,000 737,000 768,500 980,000 1,285,000 WHEAT 110,848 125,000 132,500 137,500 142,500 147,500 150,000 150,000 180,000 FERTILIZER 47,796 55,000 56,000 57,500 59,200 60,000 60,000 60,000 60,000 COAL 62,904 65,000 72,500 85,000 113,000 132,000 154,000 280,000 300,000 MAIZE 47,967 48,000 51,500 55,000 58,000 61,000 64,000 81,500 112,000 L.P. GAS 31,128 34,000 36,400 39,400 42,500 44,500 45,000 45,000 45,000 EDIBLE OIL 19,598 21,000 21,800 22,800 23,800 24,600 26,600 30,000 30,000 BITUMEN 22,803 23,500 24,500 25,000 25,000 25,000 25,000 25,000 25,000 LIQUID AMONIA 10,221 20,200 20,500 21,100 21,700 22,400 23,000 26,700 28,000 SOY BEAN MEAL 13,890 12,000 13,000 14,000 15,700 16,500 17,400 22,100 30,500 TALLOW & C. SODA 6,152 4,500 4,500 4,500 4,500 4,500 4,500 4,500 4,500 SUB TOTAL (C) 1,539,440 1,667,800 1,775,200 1,873,800 1,975,900 2,086,000 2,201,000 2,783,800 3,742,000 (D) EXPORT FERTILIZER 3,693 0 0 0 0 0 0 0 0 SUGAR 443,900 520,000 532,500 537,500 540,000 540,000 540,000 540,000 540,000 MOLASSES 128,818 132,500 137,500 142,500 145,000 145,000 145,000 145,000 145,000 PETROLEUM PIPE-LINE 58,792 60,000 65,000 71,000 75,000 77,500 80,000 100,000 145,000 PRODUCTS BARGE 26,678 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 MAIZE 0 0 0 0 0 0 0 0 0 SUB TOTAL (D) 661,881 737,500 760,000 776,000 785,000 787,500 790,000 810,000 855,000 TOTAL(C)4 (D) 21201 321 2,405,300 2,535,200 2,649,so 2,760,900 2,873,500 2,991 0 , 593.800 459700 III.GENERAL CARGO (E) IMPORT 182,773 190,000 203,000 217,000 233,000 249,000 267,000 343,000 572,500 (F) EXPORT 853 3,750 6,750 8,750 10,900 12,700 14,250 20,250 40,000 (G) TRANS IN & OUT 1,543 0 0 0 0 0 0 0 TOTAL (E)+(F)V(G) 185,169 193,750 209,75 225 261,7 281,250 360,250 612,5 IV.CONTAINERISED (H) IMPORT 524.132 547,000 570,000 600,000 637,000 675,000 714,000 910,000 1,450,000 (I) EXPORT 306,686 275,000 290,000 323,000 346,000 370,000 389,000 481,000 786,500 (J) TRANS IN. 25,251 0 0 0 0 0 0 0 0 TOTAL (H)()(J) 9 22 OC 8600 923,000ss3,00c 9 ,00 000 I 103,000 2,236,500 VINTER-ISLAND GENERAL (K) IMPORT 841 6,550 6,850 7,200 7,550 7,950 8,400 10,650 17,800 CARGO (L) EXPORr 14,636 43,600 44,800 46,250 47,650 49,050 50,550 58,600 79,900 TOTAL (K)s4(L) 15_477 50fl0 1 55,200 57 00 5 97700 VI. FISH & DIVERS (M) LOCAI. MARKET 21,478 24,500 27,300 36,000 36,900 37,900 38,800 43,300 56,300 (N) DIVERS 23,234 23,850 25,700 27,000 28,500 29,900 31,500 32,400 32,400 TOTAL (M)i _(N) 44712 48.350 53,000 63_000 40 67800 70,300 75700 88,700 GRAND TOTAL 3,382,937 3,599,300 3,790,850 3,996,000 4,192,soc 4,390,7501 7.750a 5.580.000 7,644,400 General Trend 6.40% 5.32%/6 5.41°, 4.9301 4.72%1 4.49%1 3.99% 3.20% Source: MMA & ConsultanLs 60 Mauritius: Port Development & Environment Protection Project Table 4: Port-Louis Containerized Traffic Forecast (TEUs) FY94-FY2015 C.Y 93/94 94/95 95/96 96/97 97/98 98/99 04/05 14/15 Import FULL 44,000 46,780 49,560 52,340 55,120 57,900 73,600 115,600 EMPTY 5,250 5,200 5,150 5,100 5,050 5,000 3,700 5,800 Total Import F+E 49,246 51,980 54,710 57,440 60,170 62,900 77,300 121,400 Export FULL 23,500 25,180 26,860 28,540 30,220 31,900 39,700 64,700 EMPTY 23,100 24,680 26,260 27,840 29,420 31,000 37,500 56,700 Total Export F+E 46,582 49,860 53,120 56,380 59,640 62,900 77,200 121,400 Total General Imp + Exp 95,828 101,840 107,830 113,820 119,810 125,800 154,500 242,800 Trend 6.3% 5.9% 5.6% 5.3% 5.0% 3.5% 4.6% Source: MMA & Consultants. Annex 5: Tables and Charts 61 Table 5: Comparison of Handling Costs and Tariffs for Main Cargoes (Mau. Rs. per ton/unit) Costs Tariffs Estimated Change Required (') CHC MMA CHC MMA CHC MMA Containers, per 1,136 325 2,450 576 -54 -44 TEU Unitised and break bulk 287 50 300 15 -4 232 Inter island 313 50 300 8 4 564 Bagged rice 139 42 210 15 -34 181 Fertilisers 85 40 55 5 54 695 Coal 52 38 55 5 -6 666 (a) Change required to make tariffs cost based Source: Consultant report: IMMA and CHC 62 Mauritius: Port Development & Environment Protection Project Table 6.1: Dry Cargo Tariffs Comparison Port Average charge per tonne (US$) Singapore 6 Felixstowe 6 Maputo 7 Port Louis 10 Dar es Salaam 21 Mombassa 29 Sources: Consultant Report: Port of Singapore Accounts 1993, Felixstowe accounts, 1991, Maputo accounts 1993, Port-Louis accounts 1993/4, Dar es Salaam accounts 1991, Mombassa accounts 1987. Annex 5: Tables and Charts 63 Table 6.2: MMA Tariffs Structure Existing MMA MMA Costs Including Change Required to Revenues (1993/94) 5% Return (1993/94) Make the Tariffs Cost-Based in 1994 (Rupees, Million) VESSEL DUES Pilotage 12 10 -17% Tugs 47 86 +85% Port Dues 31 52 +68% ~~~~~~~~~~~~~~~. . . . . ....... ,.,...... .. . . . ... CONTAINER DUES Container Handling 55 49 -11% Storage 31 45 +45% , ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ..... .......... ....,.. ...........;,;,. ~~~~~~~~.'.t. ........... .... .... .... '.''''"' TRAFFIC DUES Quay, pipeline dues 35 N/A N/A Import, export fees 13 N/A N/A Levy on Port Operators 10 N/A N/A All Others 10 N/A N/A ,,,S,~~~~~~~~. .. . .. ,. , .. . . .. . .. .., ., ........., .. . . . , ..... ,E TOTAL MMA DUES 247 334 +35% Source: Consultant report 64 Mauritius: Port Development & Enviromnent Protection Project Table 7.1: MMA Income Statements Ahad wOh.. y dnadS J. 30 (Mm R. 000) PrNgd 5Wthyn- d.9 J-* 30 (M.. R..00) mo i" 1n2 ins 1i94 1966 16996 197 Ion 1666 200 2061 2002 V dwdt 66,767 50.779 70.006 6,614 5,924 90.220 106,096 111,404 1166974 132,649 136.26 140,240 153.667 Tbaa. dun1 s 71,651 72.203 73,311 67,033 71,226 s3.7s0 7,648 2,340 104,720 109,956 115.454 121.226 Cdaiw A (1) 4s,2 51,239 03.134 14,370 03,003 7,153 102,492 107.617 112.069 128613 134.548 141,273 14137 T_S 173249 i6z25 2D5.342 2%203 236,760 2G154n 2,Z361 306,069 322317 366,006 363,763 402672 423,121 E_Wn R I IV 6& b .wt 61,62 61.701 666,36 66691 66,316 71.734 75.321 7a.087 83,041 66.433 59,766 Q2.779 5,616 qW49. k*d S. p, 21,43 3.0o6 23,002 32,214 38.315 40,231 42.242 44.354 25.200 2S.4S0 27.713 2,172 30.631 7,163 13,736 1o ,f3 11.776 16,26 196171 20,129 21.136 22.193 23.302 24.467 24.691 D96.75 flhlCp.epmna 2.61 2,66 2.1no09 s644 2524 5,54 5,626 1R17 1423 S.744 7,31 7,435 7,607 Tedm. taWW V. 16,670 67,624 66,640 11"26 130.175 13S164 143,610 150,861 131664 122,636 116.121 125,077 131.331 op 66 0,379 6,44s 1004702 6ZX770 101565 111,914 141633 151275 186641 242,66 234,662 277,96 291,70 30o_6 23.632 36.106 36,661 5s,102 66,11 67,070 66,047 167,061 169,530 101.125 102737 164,364 San Oai- 1346 1X 13.006 10.756 20,759 30,626 52,063 a0.066 66,360 610,63 82.725 76,124 72.667 1a4i)auAcs. -10,633 1,710 ,748 12,703 -6,907 0 0 0 0 0 0 0 0 Es_6aS54,, 0 D 0 0 1472 0 0 0 0 0 0 0 R.u**kmqut 37,166 47,296 67,214 30,461 4,902 A11126 .33n .21,650 .61.666 -3,004 2Ma11 36,036 54.3s In.kem Wn 23,166 56,214 36.602 44,272 44,006 40,6 44,148 43.26 25,237 7,076 10,146 11101 21,644 Lad1ht M. 0 0 0 0 0 7,500 7,600 7,960 1427 6933 6,406 106037 10,639 Nilaint 620.43 10o266 95667 70,723 36,104 33,370 51,311 2a.348 -2120e 12,667 40,423 14.253 7.3m2 Table 7.2: MMA Balance Sheets AU.d o of J.. (M.. RR. 000) Pqtd ol Jun 30 (MU. R.. ODO) 1666 1061 1n62 193 1664 1s 1660 1697 1I6n 166 2306 2Sl 2302 F_.dAe_ 274731 362,614 363,666 364444 1,2m,e6 1.361627 1.2e,5ss 114,363 Z331117 Z,177.60 Z0241643 1,671,406 1,716,166 Cuth pIwe 561,140 137.N69 206,771 216,220 204,166 0 0 707.293 0 0 0 0 0 EP*IIW.6 6 15061 Ro601 1601 1,s57 16,007 i6,007 16,007 16,007 16,007 16.007 16.007 16,007 16,007 a n 331,32 411 04 56,116 663,321 1,501071 1,404,.64 1,303,567 1,i606.63 2341124 2,166,67 2,04060 1.66,41S 17T34ne CSt h7A2& b 227.716 31. 69 210,606 23Z446 341,626 342,oe 307.4a 22,9611 41,432 23,716 62,640 6,o00 66,222 a.16a66flInb..6 34.147 3,167 36,.0e 41,075 46,166 2,00 2,6o0 320 2,60o 2,60 2.6Do 2,6o0 36,0o OSfmtpeqq & s.e hl66 66,760 66,76 61,634 122,146 1Sn794 100s 160 16s00 1soo 1500 16w es60 1060 wwhtre. 12,770 12,776 1,776 12,779 12.776 0 0 0 0 0 0 0 0 8.66l 371,436 432,430 264.776 37,407 ,37 34,0 3 0 6332 40,619 64,140 63,102 11322 TMd a 70x606 634,604 022,6 661,7 2,021,46 1,766.742 1,023,141 Z,156.6 24026s66 2,26,706 Z,107.560 1,906,s6 1,6644.40 U!_6 & 6q 27.130 36,016 25,N1 27,725 2,6976 0 0 0 0 0 0 0 0 DM to _ 7,37 13,606 44,67 60,041 60,621 0 0 0 0 0 0 Otuastflus 40.0h6 66.666 1026 1670 _13,1 494'1 4,141 4,661 4,61 41 4,1 41941 4,941 -*" t74.616 103,666 7,493 14,736 03,461 4,941 4,941 4,941 4,941 4,161 4,941 4,941 4,141 Logbmdd 1237O0 124,763 140,036 s.72D 406,934 350,624 ess6166 1.241656 1,366,S64 1,237,192 1,207,M 1,146,333 1.047.076 Eq*c 41p66 46,066 46,059 a,os09 46,066 a406 40,00 4e.050 46.066 ao.006 4D.069 48,059 46,060 ftat,odn.*.p.ghue. Z2,2 14W 1,354 Z,076 2,44 36,60 n73s9 56,47 a1,e4 71n014 64,606 133,163 161725 CSAiwru.u 374,376 474,376 74,376 64,376 704,370 68,136 33,594 33,594 142,14 62,446 45163 -132293 -161,676 Rats.. u.s-rn 76,616 76,616 76,616 71616 767,374 767,374 767,374 767,374 767,374 767,374 767,374 767,374 6767,374 44212 730,619 641443 677,062 1,027,667 1.701,e6 1,41200 Z1iSO732 Z367.715 Z231,766 2102646 1,664,666 1a,s6,67 Td 6b. SY 7026o 634,04 923,638 961,766 2,021,40 1i.76742 1,023,141 2,156,671 2,402,6s0 2,.705 2,1076590 1,666,666 1,044,466 Table 7.3: MMA Funds Flow Statements A d Iwlia s- rbd J.g 30 (Mm. R.. 000 Prq.l-.4 I. th. dn J. 30 (M.. R.. OD) 6 161 1662 13 161 160s 1n66 1667 166s 1t" 366 Sa1 62 Nethe Xo) 162,66 ss,ee7 71720 36,104 33,370 51,311 23,348 -210s 12,947 40,423 1,253 67,322 30.663 23,02 36X10e 36,661 95,103 96,11 97,076 66.047 167,951 150,630 161,126 162737 116,364 P.obImail_S" moa -102 - 30 2106 0 415 0 0 0 0 0 0 0 0 (Gdr4JL.nu.,nrn. 10,63 1710 1,74 12,763 -5,907 0 0 6 0 o 0 o 0 TaW kde d 04 .d 104,04 131071 13s,36e 132,27 12,046 129,44 141366 127,305 129,746 172,407 201,554 32366s 251,66 Low Rote 5 10,660 13293 302 36634 0 46R000 021,000 164000 0 0 0 0 PmemkdeubaS_omb 248 so 270 233 315 0 0 0 0 0 0 0 TeFd na16 10422 141,711 202,616 121052 4s6114 120.4e4 161,366 755,395 3174S 172467 201,654 201990 3s1,56e MU*Cqpdtpsarm 234,613 101644 166,249 632.67 320,426 0 466,000 021,000 100,000 0 0 0 O6hw2n X0 0 6 166 1,6s 36,165 44,616 36,216 36,623 61,749 00,466 66,067 75,606 LaRpm 104 7,710 4 ,6xo 63,450 V 1,634 s 6,110 a 6,636 60.332 09,332 6,332 46,332 104,026 11472 T a 31.067 114114 32,6 106,473 31,166 63,965 OR1152 755,560 126ss 121,061 101766 17,723 159,76 hc.( Inh_ww. .p. 73.226 207467 -11,o60 2,376 115,046 35.529 126 .156 1,409 61,416 91,756 54,264 61,709 Source: MMA Audit Reports and Mission estimates. Annex 5: Tables and Charts 65 Table 7.4: Mauritius Marine Authority Sensitivity Analysis MMA FY1995 FY1996 FY1997 FY1998 FY1999 FY2000 FY2001 BEST CASE Operating Revenues (000, Mau. Rs.) 269,853 322,913 351,975 460,383 510,813 546,981 616,574 Operating Margins 50% 56% 57% 65% 66% 66% 68% Return on assets 3% 7% 7% 7% 7% 10% 14% AVERAGE CASE (5%) Operating Revenues (000,Mau. Rs.) 259,951 299,648 314,630 396,434 416,255 437,068 474,597 Operating Margins 49% 51% 51% 58% 66% 69% 69% Return on net assets 2% 2% 2% 2% 2% 2% 3% WORST CASE (30/O) Operating Revenues (000, Mau. Rs.) 254,999 288,341 296,991 367,081 378,094 389,437 414,820 Operating Margins 45% 50% 50% 56% 61% 61% 62% Return on net assets 2% 2% 1% Source: Mission estimates. 66 Maunitius: Port Development & Environment Protection Project Table 7.5: Mauritius Marine Authority Assumptions for Financial Projections (1995-2005) I. BASIC DOCUMENTS USED * MMA audited Financial Statements (1990-94) * MMA five year budgets, including investments plan * Maritime and Port Statistics * Loans contracts * Relevant correspondence and Records IL DATA AND ASSUMPTIONS General (a) Inflation is assumed to be 4% in 1997 and 2% thereafter. (b) Foreign exchange is assumed to be Mau. Rs. 18 = US$1. Financial Statements (a) Port tariffs are projected to increase by 15% in 1996 and 8% in 1999 fiscal year and maintain their real value. (b) Revenues are projected to increase annually by 5% with the volume of traffic. (c) Operating costs are projected to increase by 4% annually. (d) Depreciation is on the basis of a composite useful life of 40 years for keys, 20 years for equipment with no residual value. (e) Interest charges and capital repayments are computed on the basis of the loan agreements. (f) Cash available is invested in marketable securities instruments and or equity at current market rates. (g) No specific provisioits are made for foreign exchange gain or loss as the Authority earns revenues in foreign exchange and would match assets and liabilities. (h) Provision is made to allocate 40% of internal funds to emergency operations needs. (i) Equity accounts are based on actual accounts increased (decrease) by results of operations. Annex 5: Tables and Charts 67 Table 8.1: Mauritius Freeport Authority Statement of Income (25, 50, 80, 100% Occupancy) Audited Pro ected FY1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Revenues: Rentalllnvest. 1800 6778 12960 12960 20736 25920 25920 25920 25920 25920 25920 25920 GovL grants 8,600 10,000 5,000 Licence fees 216 732 800 1500 2000 3400 3700 4100 4400 4800 5100 5202 5306 Declaration 100 800 1500 2900 5600 7200 9700 11400 11900 13500 13770 14045 Total 8,816 12,632 13,378 9,778 17,860 21,960 31,636 34,536 41,720 42,620 44,520 44,892 45,271 Expenses: Admnmistrative 998 4592 5600 5824 6057 6299 6551 6813 7086 7369 7664 7971 8289 Marketing 1,121 5,215 3,200 3,500 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Land lease 3250 3250 3,250 3250 3250 3250 3250 3250 3250 3250 3250 Depreciation 35 35 3300 3300 8025 8.025 8025 8025 8025 8025 8025 8025 8025 Interest 3994 9319 10650 10650 10650 10548 10124 9669 9182 8659 Total 2,154 9,842 15,350 19,868 36,651 38,224 38,476 38,738 38,908 38,768 38,608 38,427 38,224 Surpl. (Deficit) 6,662 2,790 -1,972 -10,090 -18,791 -16,264 -6,840 -4,202 2,812 3,852 5,912 6,465 7,048 Table 8.2: Mauritius Freeport Authority Cash Flow Statement (25, 50, 80, 100% Occupancy) Audited Projected FY1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Surpl. (Deficit) 6,662 2,790 -1,972 -10,090 -18,791 -16,264 -6,840 -4,202 2,812 3,852 5,912 6,465 7,048 Depreciation 35 35 3300 3300 8025 8.025 8025 8025 8025 8025 8025 8025 8025 Total Int. Funds 6,697 2,825 1,328 -6,790 -10,766 -8,239 1,185 3,823 10,837 11,877 13,937 14,490 15,073 Debt princ. repay 5866 6290 6744 7232 7754 Avail. (Deficit) 6,697 2,825 1,328 -6,790 -10,766 -8,239 1,185 3,823 4,970 5,587 7,192 7,258 7,318 Cumnmulative 6,697 9,522 | 10,850 4,060 -6,705 -14,945 -13,760 -9,937 -4,967 620 7,813 15,070 22,389 Source: MMA consultants 68 Mauritius: Port Development & Environment Protection Project .,. Table 8.3: Mauritius Freeport Authority Assumptions for Financial Projections (1995-2005) BASIC DOCUMENTS USED * MFA audited Financial Statements (1990-94) * MFA five year budgets, including investments plan * Maritime and Port Statistics * Loans conditions expected * Relevant correspondence and Records II. DATA AND ASSUMPTIONS General Foreign exchange is assumed to be Mau. Rs. 18 = US$1. Financial Statements (a) Rental tariffs are projected to increase from Mau. Rs.3/ftlmonth to 7/ft2/month from end of 1995 fiscal year and maintain their real value thereafter. (b) 50.000 m2. of property is expected to be available for rental in 1997. (c) Operating costs are projected to increase by 4% annually. (d) Depreciation is on the basis of a composite useful life of 20 years with no residual value. (e) Interest charges and capital repayments are computed on the basis of the loan anticipated terms of loan agreements. (f) No specific provisions are made for foreign exchange gain or loss as the Authority would not bear the foreign exchange risk. Annex 5: Tables and Charts 69 Table 9.1: Detailed Project Cost Estimates Breakdown of Totals mncl. Cont. Paramieters (in %/) T~~~~I ~~Local Phy. BAe For. (Excl. Duties & Cant. For. Gross (US$ Million) C* Exch. Taxes) Taxes Total Rate Exch. Tax Rate 1 -PORT COMPONENT 73.3 74.9 14.4 0.0 89.31 101 - CONTAINER TERMINAL A. Quays (560m) 27.8 3.6 0.0 3.ai 15.0 89.7 0 B. Earthwoks 1.2 1.3 0.0 2.51 10.0 49.1 0 C. Yard Paving 3.6 2.8 0.0 6.4 15.0 59.1 0 D. Buildings 0.7 0.4 0.0 1.1 10.0 69.2 0 E. Services (Water, Elec., telephone) 4.4 2.2 0.0 6.6 13.0 69.2 0 F. Firefighting Equipmenit 2.2 0.0 0.0 2.2 5.0 100.0 0 G. Oil Discharge Equipment 0.7 0.0 0.0 0.7 5.0 100.0 0 H. Pananux Ship-to-Shore Gantry Cranes (2) 13.0 0.0 0.0 13.0 5.0 100.0 0 1. Yard Equipments 9.2 0.0 0.0 82 5.0 100.0 a J. Spare Paits 2.6 0.0 0.0 2.6 5.0 100.0 0 K. Computer System, Office & Workshop Equipment 1.2 0.0 0.0 1 2 5.0 100.0 0 L. Technical Assistance 0.8 0.3 0.0 1.2 0.0 74.3 0 M. Training 0.2 0.1 0.0 0.3 0.0 74.3 0 Sub-Total 101 04) 67.7 10.8 0.0 78.5 102 - Road & Services A. Mar Rouge Road Nelvwrk 1.9 1.4 0.0 3.3 10.0 59.1 0 B. Securtty & Services 1.0 0.5 0.0 1.5 10.0 69.2 0 C. Engineerng 0.1 0.1 0.0 0.2 0.0 74.3 0 Sub-Total 102 4X.1. 3.0 2.0 0.0 6. 103 -OIL STORtAGE RELOCATION ....... A. Pipelines 2.0 0.6 0.0 2.6 10.0 79.4 0 B. Engineering 0.0 0.0 0.0 0.1 5.0 74.3 0 Sub-Total 103 22 2.1 0.6 0.0 >. 104 - PASSENGER TERMINAL A. Buildings 0.4 0.3 0.0 .7 10.0 59.1 0 B. Engineering ........... 0.0 0.0 0.0 0.0 5.0 74.3 0 Sub-Total 10 0$ 0.4 0.3 0.0 .0 106 - INSTITUTIONAL STRENGTHENING A. A. MaurMtus MarInie AuthorIty (MMA) Training 07 03 .0 1.0 5.0 74.3 0 Technical Assistance 0.3 0.1 03.0 0. 4 5.0 74.3 0 Subtotal A. Mauritius Marine Authority (MMA) ....1.0 0.4 0.0 IA B. Cargo Handling Corporation (CHC) Training 0.5 0.2 0.0 . .0.7 5.0 74.3 0 Technical Assistance 0.3 0.1 0.0 0.4 5.0 74.3 0 Subtotal Cargo Handling Corporation (CHC) 0.8 0.3 0.0 .1.1 Sub-Total 106 .2* 1.8 0.7 0.0 2 2- FREEPORT COMPONENT 1 7.5 6.6 2.3 0.0 8.9 201 - Mer Rouge Area (Port) A. Site Developmient 4.8 1.4 0.0 6.12 10.0 79.4 0 B. Adnmnistrative Office 1.0 0.7 0.0 .7 10.0 59.1 0 C. Wharehouses 0.0 0.0 0.0 ~ *P 10.0 0.0 0 Sub-Total 201 08 5.8 2.1 0.0 7. 202 -Technical Assistance A. Supervision di woaks 0.5 0.1 0.0 13.7 5.0 79.4 0 B. Logistics & Electronic Data Processi'ng 0.2 0.1 0. .3 5.0 79.40 Sub-Total 202 05 0.8 0.2_ 0.0 ~~ 3 -EWVIRONMENT COMPONEN 1.8 IA4 0.6 0.0 2.0 301 - Marine Enivironment A. Facilities 0.2 0.1 00 . Q 10.0 69.2 0 B. Equipments 0.7 0.0 0.0 *7 5.0 100.0 0 C. Consultant Services 0.2 0.0 00~~2 50 8. D. Training and Technical Assistance 01 .2 0.0 ;-j.40 0. 9. Sub-Total 301 14 1.2 0.4 0.0 302 -Vessels Safety A. Facilities o.o 0.0 0.0 10.0 0.0 0 B. Equipments o.o 0.0 0.0 5.0 0.0 0 C. Salanes of Local experts 0.1 0.0 0.0 5.0 89.7 0 D. Instktutional Strengthening 0.1 0.2 0.0 O3 10.0 29.2 0 Sub-Total 302 ~ 4 0.2 0.3 0.0 0 GPAND TOTAL 11 82.6 82.9 17.3 0.0 10021 70 Mauritius: Port Development & Environment Protection Project Table 9.2: Project Costs by Categories Part A. Port Development % % Totd (Mau. Rs. Mllion) (US$ Million) Foreign Base Local Foreign Total Local Foreign Totl Exchange Costs 1. Investment Costs A. Civil Works 172.1 625.4 797.5 9.6 34.7 44.3 78 60 B. Equipernents - 456.3 456.3 - 25.3 25.3 100 35 C. Consultant Services & Engineering 9.2 26.5 35.7 0.5 1.5 2.0 74 3 D. Training 8.0 23.2 31.2 0.4 1.3 1.7 74 2 189.3 1,131.4 1,320.6 10.5 62.9 73.4 86 100 Physical Contingencies 22.7 111.3 134.0 1.3 6.2 7.4 83 10 Price Contingencies 47.0 106.0 153.1 2.6 5.9 8.5 69 12 258.9 1,348.8 1,607.7 14.4 74.9 89.3 84 122 Interest During Construction - 77.7 77.7 - 4.3 4.3 100 6 TotaltobeFinanced 258.9 1,426.4 1,685.4 14.4 79.2 93.6 85 128 Part B. Freeport Development % % Total (MaU. R. Milion) (USS Milion) Foreign Base Local Foreign Total Local Foreign Total Exchange Costa l. Investment Costa A. Civil Works 30.0 89.6 119.6 1.7 5.0 6.6 75 89 C. Consultant Services & Engineering 3.2 12.2 15.4 0.2 0.7 0.9 79 11 33.1 101.8 134.9 1.8 5.7 7.5 75 100 Physical Contingencies 3.2 9.6 12.7 0.2 0.5 0.7 75 9 Price Contingencies 5.6 6.5 12.0 0.3 0.4 0.7 54 9 418 117.9 159.7 2.3 6.5 8.9 74 118 Interest During Construction - 29.9 29.9 - 1.7 1.7 100 22 Total to be Financed 41 8 147 8 189.6 2.3 8.2 10.5 78 141 Part C. Environment Protection Total (Mau. Ra. Million) (USS Million) Foreign Base Local Foreign Total Local Foreign Total Exchange Costa I. Investmnent Costa A Civil Works 1.7 3.7 5.4 0.1 0.2 0.3 69 18 B. Equipernents - 10.8 10.8 - 0.6 0.6 100 35 C Consultant Services & Engineering 0.6 5.0 5.6 0.0 0.3 0.3 90 18 D. Training 6.3 2.6 8.9 0.3 0.1 0.5 29 29 8.5 22.2 30.7 0.5 1.2 1.7 72 100 Physical Contingencies 0.8 1.4 2.3 0.0 0.1 0.1 63 7 PriceContingencies 2.1 1.6 3.7 0.1 0.1 0.2 43 12 11 5 25.2 36.7 0.6 1.4 2.0 69 119 Interest During Construction - 2.1 2.1 - 0.1 0.1 100 7 Total to be Financed 11.5 27 3 38 7 0.6 1 5 2 2 70 126 Annex 5: Tables and Charts 71 Table 9.3: Estimated Project Expenditures by Years Part A. Port Development Base Cost (Mau Ri. Million) Base Cost (USS Mllilon) 95s96 98/97 97199 9nl99 99(00 00(01 Total 95196 96(97 97n93 98(99 ff/00 00m01 Totsl A. Port Component ContanerTrrnlnal 4.2 2299 7218 1988 31 - 1,157.8 0.2 12.8 40.1 110 02 - 643 Roads &Srvices 10 397 324 - - - 731 0.1 22 1.8 - - - 41 Oil StaqeRdoc. 104 218 83 - - - 40.5 0.6 1.2 0.5 - - - 2.2 PasengerTarminal 54 54 - - - - 108 0.3 0.3 - - - - 06 InstitutonalStrengthenng 166 104 52 21 2.1 2.1 385 0.9 0.6 0.3 01 0.1 0.1 2.1 Subtotal Port Componrnt 376 3072 7677 2009 52 21 1,320.6 21 171 42.6 11.2 03 0.1 73.4 B. Freoport Com ponert C. Envirorwnent Component ToalBASELINECOSTS 376 3072 7677 2009 5.2 2.1 1,3206 21 171 42.6 11.2 0.3 0.1 73.4 Physical Contngenc'es 24 328 748 237 01 01 1340 01 1.8 42 1.3 0.0 0.0 7.4 Pr)ceCortnngencies 24 293 893 306 1.0 05 1531 01 1.6 50 1.7 0.1 0.0 8.5 Total PROJECT COSTS 424 3694 9318 2552 6.3 27 1,6077 24 205 518 14.2 0.4 0.1 89.3 Taxes Foreign Exchange 306 2930 8044 2144 45 19 1.3488 17 163 447 11.9 0.2 01 74.9 Part B. Freeport Development Base Cost (Mau Rs. Million) Base Cost (US$ Mlillon) 989e 98197 97ns8 98199 9981 ootoi Total 95se 96117 97198 98199 99100 00101 TotW A Port Component B. Freeport Component MerRouge(Port) 57.2 416 208 - - - 1196 32 23 12 - - - 6.6 TechnialAssstance 5.8 58 3.7 - - - 15.4 03 0.3 02 - _ - 0.9 Subtotal Fresport Component 63.0 474 245 - - - 134.9 35 2.6 14 - - - 7.5 C. Environment Componernt otalEBASELINECOSTS 630 474 245 - - - 134.9 35 26 14 - - - 7.5 Physical Corinngericis 6 0 4 5 2 3 - - - 12 7 0 3 0 2 01 - - - 0.7 PrieConitngencles 40 48 32 - - - 12.0 02 03 0.2 - - - 0.7 otal PROJECTCOSTS 73.1 567 299 - - - 1597 41 31 17 - - - 89 Taes - - - - - - - ForelgnExchange 534 413 231 - - - 117.9 30 23 13 - - - 65 Part C. Environment Component Base Coat (Mau. Rs. Million) Base Coat 1US$ Million) 98198 96197 97l99 98(9s9 9900 00m01 Total 9(96 9n7 37198 981199 "too 00101 Total A Port Component t Freoport Component C. Environment Component Mrlne ErpArormerit 9 3 6.7 2.9 4 0 0 7 0.7 24.4 0.5 0.4 0.2 0.2 0.0 0.0 1.4 Vassels Safety 2.6 0 7 0.7 0.7 0 7 0.7 6.3 0.1 0 0 0.0 0.0 0.0 0.0 0.4 Total BASELINE COSTS 11 9 7.4 3.6 4.7 1.5 t.5 30.7 07 0.4 0.2 0.3 0.1 0.1 1.7 PhysicalCon6ngencies 08 06 03 03 01 0.1 23 0.0 0.0 0.0 0.0 0.0 0.0 0.1 Price Contngencles 0.7 0 8 0 5 0 8 0 5 0.5 3.7 0.0 0.0 0.0 0.0 0.0 0.0 0.2 Total PROJECTCOSTS 134 88 4.4 58 21 2.2 36.7 07 0.5 0.2 0.3 0.1 0.1 2.0 Tames - - - - - Foreign Exchange 10.5 6 3 3.0 4 3 0.5 0.6 25.2 0.6 0.4 0.2 0.2 0.0 0.0 1.4 72 Mauritius: Port Development & Environment Protection Project Table 9.4: Estimated Cumulative Disbursement Schedule & Detailed Financing Plan Part A. Port Component Costs to be Financed Financing Available Financial Charges Private Interest The Govemrment MMA MFA IBRD ACF EIB LUX Sector Project During Commitemnt Cash Cumulave Amount Anmount Amount Amount Amount Amnount Anount Total Costs Constructlon Charges Total Flow Cash Flow 1 0.3 - 0.3 0.3 - - 03 1.2 1.2 - 1.2 - - 2 0.3 - 0.3 0.3 - - 0.3 1 2 1.2 0.0 - 12 -0.0 -0.0 3 20 - 2.8 2.8 1.9 - 0.7 103 10.3 0.0 - 10.3 -0.0 -0.0 4 20 - 28 28 19 - 07 103 103 01 - 104 -01 -01 5 34 - 64 64 72 - 25 25.9 259 02 - 261 -02 -0.3 6 34 - 64 64 72 - 25 259 259 03 - 262 -03 -06 7 1.1 - 22 22 08 - 09 7.1 71 05 - 7.6 -05 -12 8 1.1 22 22 08 - 09 7.1 7.1 06 - 7.7 -06 -1.7 9 00 - 01 01 - - - 02 0.2 0.6 - 08 -06 -24 10 0.0 - 0.1 0.1 - - - 02 0.2 0.6 - 08 -0.6 -30 11 0.0 - 0.0 0.0 - - - 01 0.1 0.6 - 07 -06 -37 12 00 - 00 00 - - - 01 01 06 - 07 -06 -4.3 Total 138 - 234 234 197 - 9.0 893 893 43 - 93.6 -43 -43 Part B. Freeport Component Costs to be Financed Financing Available Finanial Charges Private Interest The Governmnt MMA MFA IBRD ACF EIB LUX Sector Project During Comnitment Cash Cumulative Amnount Amount Amount Amount Amount Amount Anount Total Costs Construction Charges Total Flow Cash Flow 1 - 0.3 1.5 - - 0.2 - 20 20 - - 2.0 0.0 0.0 2 - 0.3 1.5 - - 02 - 20 20 0.0 - 21 -0.0 -0.0 3 - 02 1.2 - - 02 - 16 1.6 01 - 17 -01 -0.1 4 - 02 12 - - 02 - 16 16 01 - 17 -0.1 -0.2 5 - 01 06 - - 01 - 0.8 08 01 - 10 -01 -0.4 6 - 01 06 - - 01 - 0.8 08 02 - 10 -02 -0.6 7 - - - - - - - - - 02 - 02 -02 -07 8 - - - - - - - - - 02 - 02 -02 -09 9 - - - - - - - - - 02 - 02 -02 -11 10 - - - - - - - - - 02 - 02 -0.2 -1.3 11 - - - - - - - - - 02 - 0.2 -0.2 -1.5 1 2 - - - -- - - -0.2 - 0.2 -0.2 -1.7 Total 1.3 6 6 1.0 8.9 89 1g7 105 -127 -147 Part C. Environment Component Costa to be Financed Financing Available Financial Charges Private Intenrst The Govemment MMA MFA IBRD ACF EIB LUX Sector Project During Commitmn t Cash Cumubtive Amount Amount Armount Anmount Anount Amount Amnount Total Costs Constuctlon Charg- s Total Flow Cash Flow 1 0.0 - 0.2 - - - 01 0.3 0.4 - - 04 -0.0 -0.0 2 0.0 - 0.2 - - - 01 0.3 0.4 0.0 - 04 -0.0 -0.1 3 01 - 00 - - - 01 02 02 00 - 0.3 -0.0 -0.1 4 01 - 00 - - - 01 02 02 00 - 0.3 -00 -0.2 5 00 - 00 - - - 00 01 01 00 - 01 -0.0 -02 6 00 - 00 - - - 00 0.1 01 00 - 0.1 -00 -03 7 01 - 00 - - - 01 01 02 00 - 0.2 -00 -03 8 01 - 00 - - - 01 01 02 00 - 02 -00 -03 9 0.0 - 0.0 - - - - 00 01 00 - 01 -0.0 -04 10 0.0 - 0.0 - - - - 00 01 00 - 01 -0.0 -0.4 11 0.0 - 0.0 - - - - 0.0 0.1 0.0 - 0.1 -0.0 -0.5 12 0.0 - 0.0 - - - - 0.0 0.1 0.0 - 01 -0 -0.5 Total 0.4 - 0.5 - - - 0.7 1.6 20 0.1 - 22 -0.5 -0.5 Semesters of Bank fiscal years (FY, July I to June 30) beginning with FY96. Annex 5: Tables and Charts 73 Table 10: Operational Parameters Used for Economic Evaluation (in US$) COST ITEM GENERAL DRY BULK TANKER CONTAINER SHIP CARGO 15,000 DWT 30,000 DWT 30,000 DWT 750 TEU 1,200 TEU Capital cost 3685 4600 6650 5400 7600 Crew 1320 1320 1320 1320 1320 Repairs and maintenance 540 700 1000 950 1300 Stores/lubr. 130 130 190 130 170 Insurance 400 560 680 700 1080 Fuel (in port) 255-380 280-420 300-710 250-400 400-750 Overhead 320 380 420 400 450 Total 6650-6775 7970-8110 10560-10970 150-9300 12320-12670 Source: MMS Consultants 74 Mauritius: Port Development & Environment Protection Project Table 11: Annual Port-days per Type of Cargo & Daily Average Ship Costs (1998 and 1999) YEAR 1998 YEAR 1999 CARGO NUMfBER OF VESSEL TOTAL NUMBER OF VESSEL COST TOTAL COST PER ALONGS. DAY (USS) COST ALONGS. DAYS PER DAY COST DAYS__ _ _ _ __ _ _ _ __ _ _ _ _ Unitized and break bulk 401 6700 2686700 436 6700 2921200 Cement 91 8000 728000 95 8000 760000 Coal 19 8000 152000 19 8000 152000 Fertilizer 60 6700 402000 60 6700 402000 White oil 58 10700 620600 63 10700 674100 -Black oil 20 6700 134000 22 6700 147400 Lie. ammonia 3 6700 20100 3 6700 20100 -Bitumen 18 6700 120600 18 6700 120600 Containers 206 11300 2327800 219 11300 2474700 Total 8_76 X 7191800 935 7672100 -Average Cost per vessel day (USS) | 8210 =0= 8205 Containers Daily vessel cost of US$11,300 is weighted average for 750 and 1200 TEU vessels. Source: MMA Consultants Annex 5: Tables and Charts 75 Table 12: Annual Port-days per Type of Cargo & Daily Average Ship Costs (2000 and 2005) YEAR 2000 YEAR 2005 CARGO NUMBER OF VESSEL COST TOTAL NUMBER OF VESSEL COST TOTAL ALONGS. PER DAY (US$) COST ALONGS. PER DAY COST DAYS DAYS Unitized and break bulk 473 6700 2686700 702 6700 4703400 Cement 99 8000 728000 127 8000 1016000 Coal 26 8000 152000 41 8000 328000 Fertilizer 60 6700 402000 60 6700 402000 White oil 67 10700 620600 95 10700 1016500 Black oil 25 6700 134000 17 6700 113900 Lic. ammonia 3 6700 20100 4 6700 26800 Bitumen 18 6700 120600 18 6700 120600 Containers 236 11300 2327800 295 11300 3333500 Total 1007 7191800 1359 11060700 Average Cost per vessel day (USS) 8206 8139 Containers Daily vessel cost of USS11.300 is weighted average for 750 and 1200 TEU vessels. Source: MMA Consultants 76 Mauritius: Port Development & Environment Protection Project Table 13: Economic Rate of Return Calculation SSITmvTY ANALYSISL ECONOMIC ANALYSES OF ENGUSH CHANNEL CONTAINER AND onr TERMINAL XQUEP ED WITH TWO CRANKS SCENARIO 5 COMPARED WITH SCENARIO BA. BERTHS 1-4 & QUAY A-D (IN 1lUS) INCLUDING REDUCTION IN GANG SE AND BENEFITS FROM LARGER TANKERS HYPOTHESIS: AVERAGE DAILY VESSEL COST - 537,650 KE nRR 22: SL38 gRR 25: 19.2398 YEAR YEAR Tdol Ro&d.ia C1.i- Oil hpw C pilm TA _d M it... M."-. NM Cd NM TOTAL No RPdodio onC H-dlig Cot Cot T-.i. Fi.nd Eqipn i B-S6 NET bin. Co6l WaOio1 C.o. R R,d R .. tid..n 5.906 I 60% SAM 1996 2 13030 20 ,130,W 01 260850 -13.160.83 1997 2 _ 47 230,150 202,250 47,4322 40D C 47.432 2998 3 3,990,600 222,200 1 900,000 I 676,26 _ -202230 -202,230 6 889 04 4,4,1 1999 6 3,42.500 24_7.500 1,976,000 1,01661 -730000 -7800) 7,467, 7.39,. 2006 5 4,008.600 289,200 2052000 118 W 991 9 _ -32,00 377.270 676 02( 1,105,290 824346 7.143,40 2001 6 4.590,000 33D0,D0 2, 12,100 1,s9o6,7 -977.270 476.02 -1,0533,290 9.011, 7,s960,0 2002 7 3.353.000 35,000 2,125,4D0 2,111.96 377,270 476.02i -1.033.290 10010,3 .937,07 2003 8 6.296.5Ds 445.500 22401)( 233,7 -377,270 476,02 -1.033.290 20,179, 9,926.3 2094 9 7.267.500 522.500 2,249,600 2,247 -377,270 476,02 -1.053,290 22.26, 11.233.31 2005 20 8,216,24100 5900 2,23 0000 2,369,40 -377.270 476,021 -1,053,290 13,416,20 12.402,91 2066 22 9,280,006 660,000 2,3210400 2.412,82 -377,270 476,021 -1,013.20 24,633,22 13,579,93 2007 12 10,710,00 770.000 2,372,200 2.602,3 -377,279 476,02 -1.013,29D 26,452.5 25,39,2 2008 23 22,240,000 880,000 2.426,300 2,725,93 -377,270 476,02 -2.053,29 18,262.71 27,209,4 2009 24 24,252.500 2.0L7,500 2.477.600 3,242.86 _377.270 476.02 -2,053.290 20,18,4 29.836,1 2020 25 26,768,300 2.205,600 2.568.800 2,9927 -_377.270 476.02 -1,053,290 23,533, 22,432, 2DI L6 19.800,00 _LO.40.00 2,644,900 3,126,21 .377,270 476402 -2,033,290 27,090,91 26,037,62 20L2 15 24,862,500 2.787,500 2.736,000 3,Z65,423 _ _ 177.270 476,023 -,933,290 32,651,42 31,59.13 2023 28 32,230,000 2.310,000 2,42,400 3,420,94 .377,270 476,02 1,053,290 40,693,34 39,640,03 2024 19 42,540,000 3,080,000 2.94,30 3,399,17 .377,270 476,02 -2,053,290 52,267,9 31,224,6 2025 20 42,340,000 3.080,010 2.943.800 3,399,27 -377,270 476,02 -103.200 32,267,97 51,212, 2026 22 42,840,000 3.080.000 2,943,800 3,399,27 -377,270 -676,02 -1,053,296 32.267,97 31,214, 2017 22 42,340,000 3,080,000 2,941,300 3,399,27 5,628,000 -377,270 476,02 4,374,710 52.267,9 56,642,3 2018 23 42,840,000 3,030.2(00 2,948,800 3.399,271 3__ __ -377,272 476,02 -1,053290 52,267,9 52,224,6 2029 24 42,340,000 3,06000 2,N4,900 3,399,27 -377.270 470,02 -12,013,20 52,267,97 52,21,68 2020 25 42,94,000 3.,080W00 2, 3 ,300 3,399,1 7 -377,270 476,02 -2,053,29 32,267,9 02,284, Source: MMA & Consultants SENSITIVITY ANALYSIS. ECONOMIC ANALYSES OIF NCLISH CHA.NNEL CONTAINE9RANDOI1LTERMINAL EQUIPPED WITH TWO CRANKS _____ ______ ______ ____ ______U SCENARIO SCOMPARED WITH SCENARIGO A. BERTHS 1-4 &QUAY A-D (IN SUS)_______ INCLUDINGC REDUCTION IN GANG SIZE AND BENEFITS FROM LARCER TANKERS ____ IIRR 25: 19.2 5% - 17.50% 17-23% 11.s9% YER YEAR Told R.do.Suo CoOIoo 011l hOPO CqoiU TA -d Mol00.-00 3 M..0..ooo Nd COB Nd TOTUAL C. C... B C ... C No. R.doolon 4 ao. go Hmdtog ,J CoB CoB , Tr..1o FloOd F quip-.o __ _ Ben'r1 NET c..t~- B...I _ A&B j j Tow CoB W00og CoBt R.do. RMdoodon R.wdu.1. so0.80% J 1.00% ] 3.00% iL_____[J 15.00% Is 00% -l5%&-I5% 1996 I ______ 13.030850 - 130,000 -.131608350 0 -13.160 830 .1 5.134.978 .13,160.850 -15.134.978 1997__ 2___ ______ -47,230.1I30 -20220_______ ________ .47.432,400 0 -47.432.400 .24.547.26D -47.432.400 .54.547.260 19"B 3 3,090600 222200 1.900.000 1.676.2621_ _ -202.250 _____ _____ -202.250 6,809.062 6.686.812 6.656.475 5,633.453 5.625.113 1999 4 3,442.30 247,500 1.976.000 1.901.666 -78.000 ____ 70.000 7.467.666 __ 7.389,066 7.377,966 6.209.516 0.25.1 -2000 5 4060 208 20 Z052.000 1.899.892 -52.000 .377 270 .676.020 -1.105.290 8.248.692 7. 143.402 6.977.609 5.900.098 5.740.305 2001 6 45900000 330,000 2.112.800 1.980,570 ______ 377.2701 -676,020 -1.053,2901 9.013.370 7.960.080 7,802.087 6.608.073 6.4 50.081 2062 7 5 .15 .000 383000 2,158.400 2.111.966 .377.270 -676.020 -1.053.290 10.010.366 8.957,076 8.709.085 7.4 7.52 1 7,297.328 2003 S 6 0 445.500, 2204.000 2,133.796 -377.270 -676.020 -1.053.29-0 10.979.794 9,926.5014 0.760.511 8.279.535 8.121.741 2004 9 727070 Soo 2.506 2.249.600 2.247.000 .3777270 -676.020 .1,0535290 IZ2.6.600 11,235,510 11.075.317 9.5900.52 9.232.327 2005 10 8:216 10 5900700 __2280.000 2.369.408 .377-676.020 -1,053.290 13.456.208 12402.9]8 2.244.925 10.384.487 - 10.226.493 2006 1 I 91 80.000 660 000O 2.310.400 2.48Z2.02 .377.270 .676,020 -1.093,290 14.633.228 15.579.938 13.421.945 11,384.954 11.226.960 ~ 2007 12 10.7101100 770.000 2371.200 Z601,304 -377.270 -676,020 1.10535290 16.452,504 1S. 3". 294 15.241.301 12,931.406 ___ 12.773.413 2008 _13 12.240,000 81S0D060 2416.800 2.Z725.932 _______ 377.270 -676.020 -1.053.290 18.262.732 17.209.4412 17.051.4.9 14.470.032 _ 14,312.039 206 14 54,l52500_ 1017.500 ___47.600 3.408 ____2_4 .1 377.270 .676.020 -.1053.2940 20.009.486 19.856,196 19.678.203 16.70.2,773 -16,544.8 2010 Is 16.768 8100 1.205.600 2.5-68.800 2.992.790 .377.270 -076,020 .1.053,290 23.535.950 22.48Z.700 22.124.707 18.952.302 18.7906.308 2011 16 19.890000 1.430,060 2.644.800 3.126. 112 .577.270 -676.020 t1.053.290 V7090,912 26.037.622 25.879.629 21,97).995 21.815,992 2D12 17 2462.500 1.787. 506 2.736.000 3.265.426 .377.270 .676,020 -1.053.290 3Z.651.426 31.398.150 31.440.143 26.70-0.42 2 26.542.429 2013 18 a 32130000 2310.000 2.04Z400 3.410.946 ___ _____ 377.270 -676.020 -1.053,290 40,693.946 33,640,056 39,402.063 31.536.054 353.7S.061 j 2014 19 42040 060- 3060000 2.948.00 3.399.176 . 377.270 .676.020 .053,290 52.267.976 51,214.68 31.050.695 41.3574.4910 43.216.496 2015 20 42.040 000 3.080 000 2.948.8001 3.3909.176 .377,270 -676.020 -1,053.290 32.'267,976 51.214.686 51.056.693 45.174,490 43,256.496 j 2016 21 42.040000 3.080 000 2.048,8000 3.3909.176 .377,270 -676.020 10537299 52.267.976 51.214,686 51.050.003 45.374.430 45.216,4061 2057 22 42.040.000 3.080.000 2.068.800 3.399. 176 5.428.000 .377.270 .676.020 4,374.710 5Z2627.976 56.642.686 37.29H.H93 48,802.490 49.478.069 2____3 42.40 000 3.080.006 Z948.800 33.76 ___________ .377.270 .676.020 -10520 52.267.976 _ _ 1,214-.-8- -105.61 3 374 9o 41.716.496 2019 24 4 2.040 000 30500000 2.948.800 3.399,176 ______ ____ 377,270 676.02 1.1053.290 52.267.976 41,4686 51.0566931j 43.3 74.440] _43.216,496 2076 25 42.040.000 30800 000 2.068.800 3.399.576 .377.2701 .7.2 -.5.9 52.267,976 51,214.686 51.056.69I L 43.3 74.4901 43.216.496 Source: MMA &Consultantsl3 _ _ 11 I 78 Mauritius: Port Development & Environment Protection Project Table 15: Risk Analysis A - Hypothesis of Variation on Costs and Benefits: Probability Distribution Normal Average 0% Standard Deviation 10% Domain of variation of input -25% to +25% B - Results of the Risk Analysis: Name. ....... EIRR 25.: R sidul. /::Cost++::. Residual. / RBenef- .................. ...... ...... . ......... ... ,,, . ... . ...... . ................. Description Output Normal(0, 0. 1) Normal(0,0. 1) Cell SIl Q16 R16 Minimum = 14.23% -26.67% -28.12% Maximum = 27.74% 27.16% 32.91% Mean= 19.40% 0.14% 0.55% Std Deviation= 1.95% 9.58% 10.73% Variance = 0.04% 0.92% 1.15% Number of iteration 700. t Lt X.. W ..... .TR .0.1 3....~~~~~~11 . Annex 5: Tables and Charts 79 Chart 1: MMA - Existing Organizational Structure |Chairrran of the Board| | Director General | Int Aud Dep Director General (2) Traffic I Marine Fnnce Personnel Secretariat Pub. Relatons QCvil Engineeringj Croieainlk Pltg Stores Marine Administration | leihig |j Accounting Mechanical | PatEupet| Statistics a eansing Computer | Health & Safety| Chart 2: MMA - Proposed Organizational Structure Ca..cl. GIPn.1ni. ATop. fArolor Gnoi |o H Dp Dh.ololoorw| MIS£ EDP M.,ow Aid. A C.Io M SA-4iSuy Source: MMA Consultants 80 Mauritius: Port Development & Environment Protection Project Chart 3: Project Implementation Schedule (-4 CN4 ..... ......0.... . . .......... ............ .... .. ......... .................... 0 .0 on - .-CN 0 0 z co 0 LU - 'o~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I 0 LU C., 4) C., o 0~~~~~~~~or W -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~9t 0~~~~~~~~~~~~ ..i a c ZL~~~~~~~~~~~.a 72 - 2zM,O!8MC3MMvz. ,~~~~~~~ 0 - 0 U C2 i o L w LL:~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 0. i- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~La Annex 5: Tables and Charts 81, C ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C4 Cu CD C4 Cy CD CD C . . . . . . . . . . .. . . . . .. . . . . . . . . . . . . . . . C (1 03C) ob C C4 - 0 U7 i . . . . .. .. I.. c.2 t CY 2 CD~~~~~~~~~~~~~~~~~~~~~~~~~~~~ LLCC 0~~~~~~~~~~~~~~~' z~ CL U,~~~~~~~~~~ . 2 d CDaC 0 ~ ~ ~ ~ ~~ Cl)~ ~ ~ ~ ~ ~ ~ ~ a CU4 C4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C Ca C l C C O N S S C - C 9C I -n NNNNNN 191191 . REPUBLIC OF MAURITIUS oo PORT DEVELOPMENT AND ENVIRONMENT PROTECTION PROJECT Proiect Implenentation Schedule 1995 1996 1997 1998 | 1999 ] 2000 | 2001 ID Task Name Duration 03 04101 02 03 04 34 2 - FREEPORT COMPONEN 630d . _ _ , 36 201- Mer Rouge Area ( 260d 36 A. Site Development 52w .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. . . .. .... , 37 C. Wharehouses 25w 38 B. Administrative Of 21 6w . - 39 203 - Technical Assista 610d 40 A. Supervision olw 122w . / 41 6. Logistics & Electr 30 6w 42 202 - Plaisance Area (A 260d 43 A. Site development 52w . t-. _ _, ___ _ _ _ _ _ _ ,__ _ , / / 0 *0 Project: Task Milestone *Summary _ Date: 411/95... MTSPDEP9.MP1P Page 3 , . . .~~~~~~~~~~~~~~~~~~~~~~~~ REPUBLIC OF MAURITIUS PORT DEVELOPMENT AND ENVIRONMENT PROTECTION PROJECT Project Implementation Schedule 1 1995 11997 1998 1999 2000 2001 10 Task Name Duration 014 a2 030-40430 03 04 10203l04 1020310401 0a2l03l04 44 3 - ENVIRONMENT COMPO 1176d | _ __ _ _ _ _ _n 45 301 - Marine Environm 1176d ( _ . . -- _ _ _i_ 46 A. Facilities 348w 47 C. Consultant Servl 27.4w r 48 D. Training and Tec 235w 49 B. Equipments 21.8w 50 302 - Vessels Safely 674d . _ _,) S1 A. Consultant Servi 25w 52 B. Training 100w 53 11 - Mid-Term Review Od . 101 64 III - ProJect Completion Od Projec: 419 Task =Milestone *Summary ( MTSPDEP9.MPP Page 4 w I-. 84 Mauritius: Port Development & Environment Protection Project Chart 4: CHC - Existing Organizational Structure |Boardot Directors| |Chairmanofthe Board| |Gneral Manager| | Int. Audit dmin/Sec. jinncCOperation ManPcw.r Dev Security Adviser A its. & Cap. Expends. |Acds & Cap. Expends. Doctor d Secretaries l | Salaries & Wages Billing & Cosing Safety, Health & Welfare Conlidenfial Assistant Biling a Costing Stores Personnel Oicer Transport Officer Stores l_j Salares & Wages I Annex 6: Project File 85 Annex 6: Project File List of Selected Documents and Data Available in the Project File 1. Plan Directeur du port de Port Louis (BCEOM - Juillet 1985) 2. Port Louis Harbor - Master Plan for Development (1990 thro' 2010). (CESP - October 1989), 3. Port Louis - Revision and updating of the Port Master Plan (Posford Duvivier September 1994) 4. Upgrading Port Louis Container Facilities (Contract MH35 - Gibbs - January 1993) 5. Model Studies for the proposed Mer Rouge Container Terminal (Gibb & RPT - February 1993)), 6. Port Policy, Institutional Strengthening and Pricing Study (TecnEcon September 1994), 7. Tariff Review and Simplification Exercise (Wee Keng Chi March 1992). 8. Human Resource Action Plans for MMA & CHC (M. Andersen - January 1995) 9. The Freeport Development Strategy (Portia - September 1994), 10. Environmental Safegaurds Analysis (ERM - December 1994), 11. Mauritius Environmental Monitoring and Development Project (IBRD November 1990), 12. National Environmental Action Plan for Mauritius (March 1990) 13. MMA, CHC, MFA Corporte Plans (1996 - 1998) MAURITIUS PORT DEVELOPMENT AND ENVIRONMENT PROTECTION PROJECT PORT LOUIS BIRD SANCTUARY OF PROPOSED PORT FACILITIES l | 3fb; / . ~ ~~~~~ FUTURE TERRE ROUGE PROPOSED ROADS avu sF\ /' ~~~CONTAINER PORT EXPANSION PROPOSED PIPELINE EXTENSION 0 [i EXISTING STRUCTURES EXISTING ROADS s/ 4 y \ / / g / ~ ~~~~~~~~~~~~~~~~~~~~~~ ~~ ~ ~~~~~~~~~~~~~~The hoondor,es colors dno.oos or oo oher ,stlortal,oI, 20 H~ ~~~~~~~~~~~~~~~~~~ho, nthis -fp J, not .ply on th port 01 The World Book Oro-p -ny /Edg-nenl on the legol sto-Ut 0f orrIory or ony endorsement OIL RECEPTR 20'00 20 00- STORAGE' - ~WR -PodrdO 0 S~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ SMILES L-.-------~ Wort Louis GAS 'tto CesNDUe Sc I TqR STORAGE . - FORT , -20 - ose Hll . / Sv GEOR_r ~~YARD ) e+< v: \(il(' t}' ROCHE SELECTED EXISTING STRUCTURES N ' BOIS EXISTING MAIN ROADS FGE(ORGE 57 30 57 45 ,. 20 00 20-00 N :5 // oPoudre d'o, - '>i / 0 5SMILES 4 ' part Louis R M (0 ~RECLAIM'ED - Centre de FIocq0 7 - AREA t , -20;15 O Rose H,i)t n4N ' - FORT WILLIAM -It' - I (i'. \' $°EBERTHS RECLAIMED \X"/ 20'30 Souloc0 20'30 AREA .. . ,- 57'30' 57 45 :. / TANZANIA, so- 10' i~ rCOMOROS MALAW K- Mohotoscyo CASSIS -FORT } MOZAMBiQUE *nl=n=n=livo /0C (7/ (ho boundc,,es nouz cenomsnehe s -nd 055nst,c,, ,,.mn-, o,,on0 - ~-- INTERNATIONAL BOUNDARIES -0oBLV A on rh5 . n-s nco spic oTn rse pes l ocs Bank C/sop C -c 2QCA3// BELL VILLAGE Onc, n-sdn-sssesss on she ego, uleNs Of 055c, errssery nBELL VILLAGE A,40 50O' 1sSeopncofucbodr, C IMAGING Report No: 13980 MAS Type: SAR